One of the first things to realize about money is that there is almost an infinite supply of it on a global basis.
The number of potential sources of financing are too numerous to consider over several lifetimes.
So if you have a business proposal with a solid value proposition, there is likely going to be some one or something out there that would be interested in providing business financing to you.
That’s the good news.
The bad news or perhaps more unexpected news most business owners and managers either don’t want to hear, or find out about the hard way, is that there is a direct time relationship between the money you’re looking for and time it takes to locate and secure it.
For traditional forms of business financing for things like equipment and real estate, the time period can be a matter of weeks to a month.
For securing government grants and loans, the time period can take several months.
Equity capital can take months to years.
The more unique your value proposition, the longer its likely going to take to find the right fit.
And remember that all this is predicated on having something of value to leverage in the first place.
The point here is that while there is lots of money out there, it’s going to take time, sometimes a lot of time to secure the capital you seek.
Common thinking is more on the lines of the opposite point of view whereby the average business owner or manager assumes that securing capital will be a fairly straight forward process that can be successfully completed without any advanced planning, regardless of the use of funds.
My own unofficial statistic on the subject of time and money is that over 80% of all business financing activities are unplanned events. What I mean by this is that the quest for capital typically is not started soon enough due to the misconception in society that capital funding will be easy to come by.
At the same time, I’m not saying it can’t be a fast and easy process, I’ve just never seen it, especially when there is a significant amount of financing involved.
Sure, you can get a piece of equipment financed and funded in 24 hours if all the conditions are in order, but that’s really just a personal financing model based on credit score, reported income, and personal net worth. For just about anything else, business financing is more complicated and takes time to locate and secure.
When I say an unplanned event, I basically mean that all aspects of a business project tend to be planned out and managed in steps except for the money part, which is basically assumed to be available when required, ergo an unplanned event.
And while it may seem logical to build out a business model and then look for capital, the opposite tends to be true. Instead of just working back from the market to take advantage of a business opportunity, a business also needs to work backwards from sources of capital to make sure that the resulting business model not only lines up with the market but also with the money.
By taking this extra step in the early days of planning, the business approach can be modified to make the overall opportunity more “finance-able” or more appealing to targeted sources of capital.
But this is a time versus money trade off. That is, should we spend all our time and money developing a “if we build it, the money will come” approach, or should we invest time, energy, and scarce resources trying to plan out the path to capital funding from the beginning only to potentially find out later that it was all unnecessary work when the capital ends up being readily available?
My vote is on the latter as I’ve seen way too many opportunities or financing requirements crash and burn because the deals or situations were not in a “finance-able” state for targeted lenders or investors to do anything with, or the money that was available was not sufficient and caused the business model and time lines to be altered, creating greater risk on the success of the overall project.
That’s the thing about the time and money relationship. While you may have something of value that can attract capital over time, can you survive until that day comes, or will you run out of time?