Sunday, February 25, 2018

Guest Speaker: Jon Dimmer

    Last week, a gentleman by the name of Jon Dimmer came in and bestowed upon us a tremendous amount of knowledge pertaining to the fiscal nuts and bolts of running a business. He seemed like an incredibly experienced and successful entrepreneur, owning a large network of equity and assets.

    One of the most important things he talked about is the life cycle of funding a business. He showed us an awesome diagram detailing which stages require which types and amounts of funding. It was enlightening to see at what points in the company's life it would need to leverage different types of funding. More importantly, Jon explained when not to use funding. While there are a myriad of different options companies tend to go with at different stages, not all of them are necessary. Aside from grants, no form of funding comes without a drawback: loss of equity, interest, more board members to please, the list goes on.

    In terms of my company, this got me thinking about how I could launch the operation while minimizing external funding requirements. In my case, I am starting with a small operation that has the potential to go large, but also to stay small and boutique. For my funding plan, I estimated the need for about $10,000 startup cash. This would cover R&D and advertising for a crude first product. It would work with no other employees besides myself and a small order volume. However, upon expansion I would need to look more carefully into funding. One option I personally like is using kickstarter to pre-sell products. Since the nature of my company is such that products come out in waves, so having pre-release funding would help with the cost of producing a wave in the correct volume.

    In the far out future, VC funding would only be required if the company were to make a major expansion such as opening up a factory or increasing sales volume by a huge amount. As Jon told us, VC funding is okay as long as the received amount of money is less than the amount of growth it will cause your company (in short, there are other things such as dilution that should be taken into consideration).

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