CHARGING THE STILL METHODS OF RAISING CAPITAL FOR YOUR SPIRITS BUSINESS WRITTEN BY BRIAN B. DEFOE
n my article last quarter, I discussed some common mistakes made by early-stage entrepreneurs and how to avoid them. One of those mistakes — not taking advantage of potential funding opportunities — forms the springboard for this installment. Specifically, in this article I will explore some typical (and some not-so-typical) avenues for funding your spirits business, as well as legal issues that may arise during the process. With that in mind, let’s consider some ways to fund your shiny new business.
BE INDEPENDENTLY WEALTHY. There is an old adage to the effect that the easiest way to make a small fortune is to start with a large one. There is a lot of truth in this, unfortunately, in that it tends to be much easier to spend cash than it is to generate it. But the fact remains that if you have access to ample capital at the outset, your business is more likely to succeed than if cash is scarce. Even if you are independently wealthy — or maybe especially if you are — the truth underlying the joke means that you may not want to personally fund all of the
By personally funding it you’ll have the opportunity to make all the decisions and retain absolute control over your brand. But you will also have all the risk.
business’s needs. Sure, by personally funding it you’ll have the opportunity to make all the decisions and retain absolute control over your brand. But you will also have all the risk associated with the venture. And while you may be pretty confident that your new signature-brand, spaghetti-squash-infused whiskey is going to be the next big thing in bars across the country, what if it isn’t? Do you want to bear all the risk? And maybe more importantly, isn’t it possible that you’d benefit from getting others involved in a way that might just stop you from taking delivery of all those gourds? Having someone else kick in some of the capital can be helpful not only by keeping your fortune from dwindling too quickly, but also for the side benefit of making sure that you’re tempering your passion a bit by considering the views of others. This is particularly important if you’re thinking that the way you’ll fund your business is by funneling all your life’s savings into the endeavor. If you’re putting all your eggs in this particular basket, you owe it to yourself to make sure you’re not blind to significant problems in your business plan. Having other people invested in your business (both emotionally and monetarily) can make that happen. Also, don’t underestimate the benefits that others may bring to the table in terms of their industry contacts or expertise. After all, your ultimate objective is to make the business a success and there is certainly nothing wrong with leveraging others’ talents (along with their financial strength) in service of that goal. WWW.ARTISANSPIRITMAG.COM