Tag Archive for: financing

Scarcity versus Abundance

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by Don Simmons

Many of us suffer from a “scarcity” mindset in which we believe that life is a finite pie and if one person takes a big piece, there will be less for everyone.  Counter to this is an “abundance” mindset in which there is plenty available for everyone.

The Apostle Paul challenges the scarcity mindset in his discourse on sowing and reaping in 2 Corinthians 9:6-10.  As you read, you will see words like generous, abundant, abounding, increase, and enlarge—which are an obvious contrast to the limits of scarcity:

“Remember this: Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously. Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver. And God is able to bless you abundantly, so that in all things at all times, having all that you need, you will abound in every good work. As it is written:

‘They have freely scattered their gifts to the poor; their righteousness endures forever.’ [Ps 112:9]

Now he who supplies seed to the sower and bread for food will also supply and increase your store of seed and will enlarge the harvest of your righteousness.”

Wealth Creation: Making More Pie

What Paul seems to suggest is that giving  leads to abundant blessings so that the giver is not depleted, but rather added to. The addition should not be misunderstood to be for our own benefit, but it is given so that we can continue to bless others. The same principle can apply to harnessing the power of investing to increase the wealth in our worldwide economy. Read more

Matching A Steward Investor’s Goals with God’s Goals

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by Don Simmons

In my previous post I offered the good news of engaging in worldwide missions through investing into missional businesses.

In order to effectively move capital from where it is stored up (retirement accounts, charitable funds, savings accounts) to where it is in short supply (SMEs in emerging markets, corrupt communities, or impoverished lands), we need to reconsider our personal investment goals.

What are your investment goals?  If you are like most people, your goals probably include high financial return, minimal risk, and tax avoidance. Have you ever thought about why you have those particular goals?

What do you believe matters to God? Frequently people respond by saying that the Great Commission and the Great Commandment matter to God. Have you ever considered that your investments should be aligned with God’s objectives and His purposes since He is, in fact, the true owner of your investments?

What is the connection between our wealth and the kingdom of God?

The familiar story of Jesus’ conversation with the Rich Young Ruler, in which he asks him to sell everything and give to the poor, challenges the common blindness we exhibit when viewing the connection between our wealth and the kingdom of God.

Fiduciaries are obligated  to manage another’s resources according to the true owner’s wishes. As God’s fiduciary, managing God’s resources, we must do some hard work and think through questions like these:

1. Does my portfolio look any different than someone’s who does not proclaim Jesus as their Savior?

If we are merely investing to achieve financial returns and protect our holdings either for our own comfort or to pass on to our children, then we are not investing any differently than the majority of investors on the planet.  We cannot ignore Jesus’ teaching on Mammon in Matthew where he challenges the assumption that a person can serve both God AND Mammon. Read more

God’s Steward Investor and the Great Commission

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by Don Simmons

I want to challenge those of us who have achieved basic financial competency and have plans in place for our investments to earn financial returns. If we truly believe that God owns all of our resources, we must believe that includes our investment holdings as well.

We need to become God’s steward investor, one who is charged with managing His resources for His purposes.  He is the true owner, and we are his managers, his oikonomos. An oikonomos, in a Greek household, was the manager of the owner’s resources. As God’s oikonomos in the 21st century, the investments under our management are actually assets that belong to God himself.

An oikonomos commits capital with the expectation of furthering the kingdom of heaven on earth. These steward investors do this by seeking to achieve not only financial returns, but also positive spiritual, social, and environmental impact. A steward investor knows first and foremost that they are a fiduciary,  managing someone else’s resources.

Fulfilling the Great Commission through Investment

Inherent in the term “Business as Mission” is the word mission. Ever since Jesus sent out the seventy-two  into his harvest field, and then charged the believers gathered after His resurrection to go and make disciples of all nations, many followers of Jesus have accepted the call to go as missionaries.

Often willing to risk what’s familiar for what’s foreign, what’s comfortable for what’s complicated, what’s predictable for what’s problematic, men and women stake their lives on God’s faithfulness to go ahead of them and produce fruit from their ministry for His kingdom. Read more

God’s Steward Investor: Investing for Eternal Impact

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by Don Simmons

To the BAM Global audience: thank you for the chance to engage with you this month through a series of blogs dedicated to themes of investing God’s resources for eternal impact.

I have been a financial planner for over three decades and a follower of Jesus during my entire career.  In recent years, God has opened my eyes to truths I cannot escape regarding the role we all have to play in connecting our financial resources with God’s eternal purposes. In short, I have come to believe that we are all God’s resource managers, his fiduciaries, and as such we are to become his steward investors. Simply put, we must move beyond financial competence to proactively investing God’s resources to achieve His eternal purposes such as the Great Commission. We must not simply invest for our own temporal financial goals.

What is a Steward Investor?

A steward investor is a person who acknowledges that God owns it all and seeks to invest in a way that accords with God’s purposes.

By definition, a steward is a manager of someone else’s resources. It derives from the Greek word oikonomos, who was the manager in an ancient Greek household. A steward knew he didn’t own anything but had an obligation to manage the resources and affairs of the owner as the owner himself would.

All of our resources—financial and otherwise—have been given to us by God, the true owner. God tasks us as his stewards with managing those resources according to His values, goals, and precepts communicated in scripture.

While many of us value “good stewardship” of our finances, making sure we live on a budget, save, and give generously, most of us have not considered how to steward our investments. Read more

2 Company Leaders Look Back: Financial Planning Highs and Lows

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Read this classic blog from our Archives, first published on The BAM Review blog in November 2016 and republished for the Summer Series 2022.

 

When we have a major decision to make, we often ask those around us for input. Sometimes we follow that advice and other times we don’t. Occasionally we might look back and wish we had followed the advice we received from others. Hindsight is a beautiful thing!

Drawing on the wisdom of others can be helpful and the benefit of hindsight is illuminating. With those two things in mind, we asked a couple of well established BAM leaders for their advice about financial planning. We asked them to share what has been fruitful and has enabled them to grow companies that are doing well. We also asked them to share the lessons they’ve learned the hard way and what they would do differently in hindsight.

Hospitality Company 

Company A is a Hospitality company with 125 employees, it has two owners and was established 12 years ago.

What financial planning have you done to grow your company to the place it is today?

The growth of our company over the past five years has been quite substantial. We have seen our revenue increase 475%, and our earnings grow 540%. Though our financial planning was not the driver of that growth, it was certainly the foundation. Without the steps we have learned and taken over the years, we would not have been able to facilitate the amazing growth we have seen.  Read more

Investment in BAM: How to Get the Funds Flowing

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When we asked veteran BAM leaders to identify some of the pressing issues that are facing the business as mission movement in the next decade, among the issues they identified were several areas that could broadly be categorized as ‘resource gaps for BAM companies’. These described a lack of the kinds of resources and inputs that BAM practitioners, and the enterprises they run, need to increase their chances of long-term viability and health. These resource gaps included:

1. Adequate financial capital flow.

2. Adequate human capital flow – both in terms of a) recruiting the right kind of people to begin and sustain a BAM company, and b) succession planning and the successful transition of a BAM company from one generation of owners to another.

3. Adequate support for BAM practitioners, especially mentoring, accountability and care.

We will be posting articles covering each of these issues during the month of June, beginning with the challenge of financial capital flow.

Financial Capital Flow – Where’s the block?

Two main issues were identified within the issue of financial capital flow:

1. A lack of investors ready to finance BAM companies

2. A lack of investable BAM businesses, or ‘deal flow’

What was agreed is that adequately financing BAM is an issue that must be addressed for the future, and to address it we are likely to need to work on both ends of this flow.  Read more

8 Unexpected Questions from Investors

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by Patrick Lai

Lions and Martyrs are entering the colosseum to do battle. The Lions are investors, hungry to invest in solid BAM/B4T businesses. They hope to make money, as well as create new opportunities for the Good News among the least reached. The Martyrs are starting new businesses in spiritually, and some cases, economically difficult locations. The Martyrs are coming to lay it all on the line, praying not to be eaten alive. They are hoping to tame a Lion or three and bring each Lion, along with their expertise and their money, into their start-up business.

If you’re raising money for your company and you want to pitch potential investors and shareholders, it’s important to plan ahead for the questions savvy investors may ask.

Naturally, the Martyrs, and anyone who is seeking capital, can expect to be asked about your financial projections, timeline, the competition, your team, marketing strategy, risks, personal experiences, how much “skin” do you have in the business, and your exit strategy. Expect experienced investors to study your business plan with a fine brush and comb. Plus, investors will also grill you on your spiritual and personal life, to learn what you are made of.

Read more

Identifying and Maximizing BAM Success Factors Part 1

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By Paul Harrington

In this new series on ‘BAM Success Factors’ we invite guest authors to share what they consider the key factors contributing to success and growth for BAM practitioners. To open up the series, Paul Harrington gives us an overview of the most important BAM success factors he has identified through research. 

BAM Success Factors Part 1: Professional and Technical Considerations

Starting a new career in a part of the world that is not your cultural home is a big undertaking for anyone. For those who wish to use their businesses as a means through which God can reach the world, the challenge can be even greater. Everyone involved in the Business as Mission movement wants to make sure that every practitioner that takes the bold step of setting up a business with Kingdom values in a new context succeeds. Thankfully, many of the keys to success for BAM practitioners are known and have been validated by scholarly research.

BAM practitioners aren’t the only group of people who live and work outside of their home countries. Many companies and governments, including the military, as well as mission agencies and non-governmental organizations (NGOs) send their employees to work around the world. While government and military techniques do not necessarily provide insight into how BAM practitioners can succeed, research done by and for private employers, NGOs, and mission agencies provides insight into the factors that lead to successful deployment of their personnel and have relevance for BAM practitioners.

Success means different things for different people. Since business as mission is a unique discipline with defined goals that might include the fourfold bottom line – achieving the financial goals of the owners of the company, social impact goals of the community in which the business works, goals to protect and enhance the environment, and spiritual impact goals – success in a business as mission enterprise can be measured.  Read more

Two Company Leaders Look Back: Financial Planning Highs and Lows

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When we have a major decision to make, we often ask those around us for input. Sometimes we follow that advice and other times we don’t. Occasionally we might look back and wish we had followed the advice we received from others. Hindsight is a beautiful thing!

Drawing on the wisdom of others can be helpful and the benefit of hindsight is illuminating. With those two things in mind, we asked a couple of well established BAM leaders for their advice about financial planning. We asked them to share what has been fruitful and has enabled them to grow companies that are doing well. We also asked them to share the lessons they’ve learned the hard way and what they would do differently in hindsight.

Hospitality Company 

Company A is a Hospitality company with 125 employees, it has two owners and was established 12 years ago.

What financial planning have you done to grow your company to the place it is today?

The growth of our company over the past five years has been quite substantial. We have seen our revenue increase 475%, and our earnings grow 540%. Though our financial planning was not the driver of that growth, it was certainly the foundation. Without the steps we have learned and taken over the years, we would not have been able to facilitate the amazing growth we have seen.  Read more

Cash Flow Mishaps: Stories from BAM Practitioners

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We asked BAM practitioners to share their insights about cash flow. Here are 6 mini-stories of BAMer ‘cash flow mishaps’ or near misses!

[Read Part 1: 10 Cash Flow Tips and 10 Red Flags from BAM Practitioners]

6 Cash Flow Stories

One cash flow mishap we’ve experienced is significantly underestimating cash needs to service a period of significant growth. This can happen when long lead time raw materials are needed, with up-front payment. It can also happen when financing growth requires organisational learning and capacity building, it then takes extra time to ramp up production, and the working capital cycle is longer than expected. Another real danger is when a series of smaller mishaps all happen at the same time, for instance low quality raw materials, late delivery of materials, late payment by customers for finished products. Each of these on their own are manageable, but create a serious issue when stacked together. We have been able to develop some cashflow forecasting tools using MS Excel which give us visibility on future cash needs, including graphs, which feed into weekly reporting. This has been invaluable to us. – MH, Manufacturing, Asia

 

A few years ago I led a new initiative at our company to build a software product for retail banking. I was hoping that the recurring revenue from product sales would offset the erratic cash flows that are typical of a project-based software company. A project team of eight members spent 18 months building the product and we spent another year having a sales team sell the product. For a small company like ours the outflow of funds in this experiment resulted in a major blow to our cash flow for a couple of years. What I learned from this costly mistake is that a project oriented service company is not automatically good at being a product sales company. They are two different types of organizations with different team structures and competencies. – Joseph, IT, India/USA

Read more

10 Cash Flow Tips and 10 Red Flags from 10 BAM Practitioners

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In a truly great company, profits and cash flow become like blood and water to a healthy body: They are absolutely essential for life, but they are not the very point of life” – James Collins, Good to Great

As Jim Collins so wisely said, cash may not be the ultimate point of a company, but it is like blood to the body – essential for survival.

We asked 10 BAM practitioners to share their insights about cash flow. Read below the 10 tips they shared and also 10 ‘red flags’ – the tricky situations they have encountered where cash flow can easily trip you up.

In Part 2, we share 7 short stories of ‘Cash Flow Mishaps’ – real-life cash flow challenges that BAM practitioners have encountered

As one BAMer summed up, “Cash flow is an important indicator of how a business is doing, don’t take your eye off it!”

Cash flow tips from BAM Practitioners – Do:

1. Always watch your cash flow very carefully and plan ahead at each stage.

2. When business planning, find a cash flow projection template and someone who will force you to fill it in!

3. Use forecasting tools and technologies to help you watch and manage cash flow on an ongoing basis. Read more

Numberphobic? 3 Key Ideas to Increase Chances of Business Survival

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by Dawn Fotopulos

According to an Intuit survey from 2015, 87% of small business owners do their own books and 47% claim financial illiteracy. It’s not a surprise that more than half of small business start-ups never survive to see year 5 of operations; it’s remarkable that half do. If you follow start-up history out to year eight, the failure rates are in the 80+ percentage. Any thinking person would take their start-up capital and go to Las Vegas. You’d have much better odds of winning there.

What if, by learning just a few key ideas, you could double even triple your probability of small business survival? What if a one day commitment of your time could change the next twenty years of your future and the future of your household? What if what’s in this article prevents your small business from becoming a statistic? It can. Here’s how.

Every business owner needs to answer three key questions:

  • Am I making money? (Showing a profit)
  • Do I have enough money to pay the bills? (Enough cash flow)
  • Am I building wealth or destroying it? (Building net worth)

Read more

Financial Planning: How Do I Prepare to Present to Investors?

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by Mike Baer

Funding for your new business is obviously crucial – no cash, no business. So let’s think about this from an investor’s perspective. What is it that interests him or her? What does he or she want to see? What questions answered?

Here’s what I’d be asking:

  • What exactly is the product or service that you intend to sell? Don’t assume that I understand it. Make it simple for me.
  • What is the market demand for this? Is it a cool idea, a “me too,” or is there a real demand? In other words, do people really need/want your product or service?
  • Who will your competitors be? How is your idea better than and different from theirs?

This first set of questions is about your viability in the market place. Is this a real business? This second set of questions is about you. Can I count on you? Read more

Important Issues to Consider in Financial Planning

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by Colleene Isaacs

Let me start by saying, I hate dealing with financials! In a perfect world, I wouldn’t have to think about or plan for the financial aspect of doing good business. Or better yet, I would have some really smart CFO-type deal with it, and be done with it. Unfortunately, as far as I know, we don’t live in that world. So just like everyone else, we have to do the financial “due diligence” (homework), necessary to do business well. There are a lot of great resources to assist as you begin your planning process, particularly when it comes to the financial matters of business. One suggestion I would make is save yourself a lot of grief, and apply a template like the “Business Model Canvas” to your planning process (see the book Business Model Generation.)  This model follows a somewhat lean startup methodology, and is a great way to visually scan and plan for all the aspects of business planning and design. 

Let’s really focus on some things you should be thinking about financially when you start the business start-up journey – a journey that is a very winding road, never a straight path!

Expect the Unexpected

A general principle is start with Plan A, but always have a back-up plan(s). You only have a limited insight into what the future will bring. You may be faced with geo-political situations, product development delays, weather, material sourcing issues, local permitting requirements and delays, transportation issues, broken equipment, etc. that you were not expecting. Any of these external elements, can severely impact planning and business execution schedules, as well as the finances required to support those activities. Just know that wherever there are opportunities for something outside your control to fail, there is a real possibility that it will.  Read more

Business Planning Part 3 Introduction: Financial and People Planning

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We start a new series on The BAM Review blog this month that will focus on developing your business plan: Financial and People Planning.

In previous series we have covered Business Planning Part 1: Introduction to Business Planning and Business Planning Part 2: Product and Market. In Part 3, a new series that will take us up to the middle of December, we will focus on two essential elements in the business planning process: money and people!

Show Me the Money

Crunching the numbers and working out financial projections during the planning stage is a major part of discovering whether your business model is viable or not. Until you start to work out your costs, price points, sales forecasts, cash flow projections, break even point and so on, your business idea will remain just that, an idea. Even if you don’t need to present your plan to outside investors, you will still need to create a financial plan so that you know whether your business model can ever be profitable and how much working capital you will need to sustain it through launch. Read more

Do Economic Incentives Matter? A Nosey Economist on BAM Financing

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AND THE AWARD GOES TO...

Our goal is to provide the BAM Community with the best content and resources available. We are currently highlighting various articles and resources which have stood out above the rest. Below is the “Editor’s Pick” for the spring of 2015.

Please enjoy and thanks for following!

Interview with Dr. Steve Rundle

Steve, I know you have been doing some interesting research on BAM in the last few years, can you briefly describe what you have been looking at?

As an economist, I’ve always been interested in the relationship between the structure and governance of a company and its performance. Since the 1990s, when I first started meeting people who were combining business and missions, I naturally asked lots of nosey questions about the company’s financing, revenues, profits, and so on. I was especially intrigued by the role venture capital might play in funding businesses that were not only extremely risky, but were being managed by people who, in many cases, admitted that they weren’t too concerned about profits and that in fact they would be satisfied with just breaking even. I was not surprised to discover that no venture capital firms existed in this space, at that time. Most of these businesses were either donor funded, or in some cases funded with the help of one or two “Angel Investors.”

But this raised lots of new questions about the performance of these businesses. What are the expected outcomes, and how are practitioners incentivized to achieve those outcomes? Practitioners who are affiliated with a missionary sending organization may be discouraged from being too serious about business for fear that it will distract them from their ministry goals. One way to remove that distraction is to require the practitioner to raise donor support, in which case they will not be dependent on the business for income. This might sound logical at first, until you start meeting other BAM practitioners who are entirely dependent on their businesses for their salaries who are having an incredible impact. So I wanted to look at this more carefully by comparing the outcomes of people who drew 100% of their income from donors with those who are 100% business supported. Read more

How They Were Funded: Three BAM Stories

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Dreaming is the easy part of starting a business. Putting the pen to paper, turning ideas into action, and getting others on board to believe in the vision with you is where the real work begins. Getting financing for the business is at the crux of turning ideas into reality, where the vision grows legs and gains momentum. This is true for a startup or for recapitalising a growth-stage business.

Every business is financed differently and it can often look a bit messy. Here are three sketches that represent a small cross section of how BAM practitioners have financed their business, both in the startup phase and long term.

Garment Manufacturing – Donor-based Startup, Crowdfunded Growth

Peter and Marit and their business partners began with a vision to create jobs for an exploited and underserved segment of the population in Nepal. In 2013 their business was born, an ethical garment manufacturing business in Kathmandu. The Nepali Government requires foreign-owned businesses to invest a minimum of $50,000 per partner in business startups. To invest their $50,000, Peter and Marit opted to involve their wider stakeholder community and raised donations for the startup capital. Eighteen months into operation, the business is self-sustainable and able to keep moving towards their growth goals. The donor startup capital approach has given them freedom to take some calculated risks, which has been key in determining the direction they have taken as a company. Read more

Do Economic Incentives Matter? A Nosey Economist on BAM Financing

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Interview with Dr. Steve Rundle

Steve, I know you have been doing some interesting research on BAM in the last few years, can you briefly describe what you have been looking at?

As an economist, I’ve always been interested in the relationship between the structure and governance of a company and its performance. Since the 1990s, when I first started meeting people who were combining business and missions, I naturally asked lots of nosey questions about the company’s financing, revenues, profits, and so on. I was especially intrigued by the role venture capital might play in funding businesses that were not only extremely risky, but were being managed by people who, in many cases, admitted that they weren’t too concerned about profits and that in fact they would be satisfied with just breaking even. I was not surprised to discover that no venture capital firms existed in this space, at that time. Most of these businesses were either donor funded, or in some cases funded with the help of one or two “Angel Investors.”

But this raised lots of new questions about the performance of these businesses. What are the expected outcomes, and how are practitioners incentivized to achieve those outcomes? Practitioners who are affiliated with a missionary sending organization may be discouraged from being too serious about business for fear that it will distract them from their ministry goals. One way to remove that distraction is to require the practitioner to raise donor support, in which case they will not be dependent on the business for income. This might sound logical at first, until you start meeting other BAM practitioners who are entirely dependent on their businesses for their salaries who are having an incredible impact. So I wanted to look at this more carefully by comparing the outcomes of people who drew 100% of their income from donors with those who are 100% business supported. Read more

Capitalizing Growth-Stage SMEs: Profile of a BAM Investment Company

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Excerpt from the recently published BAM Global Think Tank report on Business as Mission Funding. 

Transformational SME – BAM Investor Profile

Transformational SME (TSME) was established in 2001, after two and a half years of market research and business plan development. Their goal is to capitalize growth-stage SMEs with patient, strategically integrated financial, intellectual and human resources to achieve economic, social, environmental and spiritual impact in the Arab world and Asia. 

TSME is a BAM company, composed of an investor-capitalized fund, which operates as a Bare Trust under UK law, and a professional fund management company registered in Canada. TSME provides primarily mezzanine loans to carefully screened, Christian-owned and managed SMEs which through genuine business as mission seek to achieve the so-called “quadruple bottom line”.

In addition to mezzanine finance, TSME provides mentoring and coaching to investee companies and a variety of technical advisory services, for example, pre-investment consulting to start-up companies, and a range of input to strategic mission partners such as mission agencies wishing to engage in BAM. They also engage in strategic talent search for key professional roles within BAM companies. Read more

Lessons from the Edge: Investing in BAM Companies

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Insights from a BAM Practitioner

Peter has lived and worked in a professional and business capacity for over 30 years throughout Asia, Europe, the Middle East, South and North America and is a pioneer in the business as mission movement. He currently consults on business as mission all over the world and is the CEO of a global investment fund for BAM enterprise in the Arab world and Asia.

Financial capital is only one of many kinds of patient capital needed by business as mission companies 
There are seven forms of capital which need to be strategically integrated into a BAM business over a long, patient, persistent timeline in order to achieve the sweet spot of optimal impact. These seven forms of capital: human, intellectual, financial, social, spiritual, infrastructural and natural capital, all need to be strategically integrated in a balance that will be variable for your context. If you are not paying attention to all of these forms of capital, you risk being knocked off the sweet spot and your impact will be diminished.

Return on investment from BAM companies is possible
Although not easy, it is possible to invest with modest expectations of financial return into even the most difficult environments and, risk of loss notwithstanding, see a full return of capital and a modest return on investment. One challenge is finding companies that are investor-ready and able to meet the rigorous standards necessary. However we have found that relationships, based on integrity and trust within the Christian community, bring remarkable risk-reducing benefits. Company owners generally are admirably open and honest in their applications and conduct of their business affairs, and often make significant personal sacrifices in order to serve Christ, and to honor the loan obligations of their companies.

Competent mentoring can make a vital difference for BAM companies
There is a compelling value proposition for BAM companies and their investors in receiving competent, wholistic mentoring. The mentoring provided has been vital in building relationships of trust with the companies, which then facilitates growth and even greater acceptance of advice. Responsiveness to experienced input has enabled companies to grow and develop into better-managed and effective models of Christ-honoring business. Mentoring has been instrumental in early recognition of looming problems, with timely solutions protecting against financial and other loss.

5 Funding Models for Your Kingdom Startup

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by Mike Baer

Post first published on the Third Path Blog, reposted with kind permission.

The still famous line from the movie Jerry McGuire is “Show me the money!” Some of you have been thinking that as you’ve read the rest of this series. How do I get money to launch my startup? I’m going to outline several “programs” you can consider:

The “Missionary for a Moment” Model

I have to tell you upfront that I have rejected this model for years. However, recently a close brother whom I respect greatly challenged my thinking and got me a little closer to acceptance than I was before.

The Momentary Missionary Model essentially uses raised donations or support to cover living, travel and certain startup expenses just like a normal missionary would raise support to cover living, travel and ministry expenses. What makes this work is that you are committing to your “donor-investors” to be off their giving roles within a specified period of time, to have your business profitable and to live off it.

Your donor audience in this scenario is sympathetic although they may not be the most investment savvy. Be careful to not take unintentional advantage of that sympathy. This is business. Read more

Bootstrapping your Business vs Seeking Outside Investment

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What would you say were the most important things to prepare or think about as I approach a BAM investor? What are some typical pitfalls or mistakes I could avoid?

Before you walk down the road of approaching an outside investor, why not consider the possibility of self-funding – also known as “bootstrapping” – your company? If you decide to bootstrap, you may be surprised at how differently you approach your business, as well as the funding process. Bootstrapping can create a healthy foundation from which to begin your business, and can provide invaluable lessons to entrepreneurs. Lessons learned from bootstrapping can include:

  • Tests your business plan – A bootstrapped business that can bring a product or service to market, develop a customer base, and create a revenue flow will help you identify the strengths and weaknesses in your plan. You now have the solid proof you need to affirm your ideas and build on them. You will have determined if the market needs or wants your product, what the market is willing to pay for your product or service, and what will be required to put the business on a path to profitability. In addition, you will have a better sense of true costs, not just cost of goods, but hidden costs that are usually not considered or may not be known when a plan is developed. Bootstrapping will also force you to consider how the product or service is being developed, and it may cause you to re-consider aspects of product development as being unnecessary for product or service launch.
  • Provides incentive for a low burn rate – Limited financial resources will greatly influence the decisions required to operate your business, while at the same time maximizing efficiencies. This may include hiring employees that can function in more than one role, outsourcing certain roles until you can afford to bring them in-house, minimizing overhead like office space (know anyone with a spare garage?), as well as using a creative approach to marketing.
  • Skills and values development – Self-funding can be a useful mechanism in helping you gauge your true passion and commitment to your business. It will help you develop a higher level of accountability as well as resourcefulness, resilience and courage. It will most certainly test your risk aversion.

Read more

Approaches to Business as Mission Funding

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Excerpt from the recently published BAM Global Think Tank report on Business as Mission Funding.

The word ‘funding’ refers to the spectrum of financial resources required for a business venture through the normal life-cycle phases of every business: start-up, growth, maturity, and decline. It includes a range of monetary sources, each with attributes unique to each stage of growth. Funding takes on many shapes and sizes, from self-funding to crowdfunding, microcredit to bank loans, and seed funding to venture capital.

Broadly speaking, the subject of funding includes sources, structure, application and management of monies in all areas of the business. In the context of business as mission, perceptions and actions relative to both the business and the capital should be informed by Biblical principles.

In a broader context, funding is distinguished as being financial capital – such as debt or equity – alongside other forms of capital input, such as intellectual, human, social, spiritual, infra-structural and natural.

BAM funding models

Traditional sources of business as mission funding parallel those in typical business funding. In the majority of cases, profitability is the key issue that drives capital to those companies most likely to achieve viability. For most investors, profitability is a non-negotiable measure of success. Read more

How to Prepare for Investors

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What would you say were the most important things to prepare or think about as I approach a BAM investor? What are some typical pitfalls or mistakes I could avoid?

Funding for your new business is obviously crucial – no cash, no business. So let’s think about this from an investor’s perspective. What is it that interests him or her? What does he or she want to see? What questions answered?

Here’s what I’d be asking:

  • What exactly is the product or service that you intend to sell? Don’t assume that I understand it. Make it simple for me.
  • What is the market demand for this? Is it a cool idea, a “me too,” or is there a real demand? In other words, do people really need/want your product or service?
  • Who will your competitors be? How is your idea better than and different from theirs?

This first set of questions is about your viability in the market place. Is this a real business? This second set of questions is about you. Can I count on you? Read more

Ask a BAM Mentor: Financing a BAM Company

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Twice a month, our panel of mentors answer your practical business questions. Send us your questions!

Dear BAM Mentor,

What would you say were the most important things to prepare or think about as I approach a BAM investor? What are some typical pitfalls or mistakes I could avoid?

~ Getting Prepared

Dear Getting Prepared,

Funding for your new business is obviously crucial – no cash, no business. So let’s think about this from an investor’s perspective. What is it that interests him or her? What does he or she want to see? What questions answered?

Here’s what I’d be asking: What exactly is the product or service that you intend to sell? Don’t assume that I understand it. Make it simple for me. What is the market demand for this? Do people really need/want your product or service? Who will your competitors be? How is your idea better than and different from theirs?

This first set of questions is about your viability in the market place. Is this a real business? The next set of questions is about you. Can I count on you? What is your background? Why are you particularly qualified to launch a business like this one? Do you have a specific knowledge base or experience that would give me confidence that you can actually pull this off? Who do you have around you? What is your track record? Who will vouch for your character? Your commitment to Christ?

Read more

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