I doubt this is good advice for all of you, but for some of you it certainly is.

When is the best time to look for money to grow your business? It is likely when you don’t need it. Why? Because that is when you are in the best position to use the money for what the venture capitalist/bank/Uncle intended it for. Growth. Sales. Profit.

I am sure there are some banks and VC’s out there who would be willing to provide capital for a turnaround, or an idea you just came up with but they are few and far between, and it will cost you a lot more.

So why would you take money when you don’t need it from a VC? The value should be well beyond the capital invested. If you are bringing in money and are in it just for the money, than you are off base and should rethink your approach.

A good VC acts as a mentor, business coach, sounding board, network resource, and helps you keep your focus. We brought a venture capitalist early on in our company, not because we needed the money, but because we wanted the accountability. I won’t lie to you, having the money definitely helped. Our franchise sales nearly tripled just after the injection of capital. We put that money to work quickly and it allowed us to strengthen our management team, and offer more to our franchisees while we were still a young company.

In my humble opinion, if you are just starting a business the first place to look to fund operations are friends, family, and fools. Please make sure that one of those fools is yourself. I have heard that Visa/Master Card finance the majority of start-ups and I don’t doubt it.After an idea begins to take shape, and you have your first customer you really have a few options to raising money but the one I recommend is organic growth.The way you put money into your bank account is from your customers writing a check not an investor. The more checks that get written from customers the more likely VC’s and Angels will be interested your business. If your business is one that could grow a lot faster and if it had marketing and sales behind it, than I would definitely advise you to start looking at an equity investment as an option to accelerate growth. Most of my experience with VC’s and Angels come from this category.

This being said, I recognize that there are some great business that start with a wicked idea, pitch investors, fund research, develop a product and then take it to market. There is no question that this is a path taken, but usually less traveled.

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