December 29, 2022
Today you’re in for a treat. That’s a pun. You’ll understand in a minute. Today we got to have a conversation with the brilliant and wonderful Candace Nelson, the founder of a little company called Sprinkles, aka the first cupcake bakery and cupcake ATM.
Today we talked with Candace ALL about the financial side of business startups. She breaks down for us the different types of funding methods you can use as an entrepreneur, the pros and cons of each, how to think like an investor when starting a business, how to go about finding an investor for your business or your idea, then you should consider taking that step, and SO much more. This episode is PACKED full of DETAILED insight into the financial backend strategy and mindset you should have as a CEO focused on building a profitable, thriving business.
Candace is a serial entrepreneur, a New York Times bestselling author, Wall Street Journal contributor, and an expert in turning one’s passion into a profitable business. Candace revolutionized the baking industry when she left a career in finance to start Sprinkles, the world’s first cupcake bakery and Cupcake ATM. Nelson followed with the launch of Pizzana, a growing chain of award-winning pizzerias. She continues to expand her portfolio of investments as an angel investor. With her passion for mentoring entrepreneurs, she just released her book, Sweet Success: A Simple Recipe For Turning Your Passion Into Profit in November.
Sprinkles was bootstrapped, it was an idea that no one believed in. They were left with the only option which is bootstrapped, we pulled the money they had in their bank and gave them that amount of time to develop the recipes, find a location and start a business. What’s excellent about bootstrapping is that if you do sell your business you own all the equity in that business. Not everyone has money at their disposal, you also need to be really realistic.
If you have someone in your family who is willing to loan you the money. What’s great is they will give you a low-interest loan or a better rate than what a bank would put you through.
Then there is maxing out your credit cards, it can be a funny story when you hit success, but can be not a fun story if you get yourself into debt and you can’t get yourself out of it.
There is a lot more available in terms of funding these days. Candace knows a couple of bakers that are crowdfunding their first retail bakery.
What is crowdfunding:
If you don’t reach your goal, you don’t get any of the money with your start-up if you go with a company to crowdfund, whereas with a GoFundMe you get the money regardless. There is a lot of nuance with crowdfunding but there are a lot of platforms popping up that are making it easier.
There are a lot of templates online you can use to create a pitch deck. A pitch deck is taking you through all the things you should be thinking about as you start your business. What is your thesis? What is your idea? Why do you think it has value? What is the market? How big is the market? Do you have any early signs of traction? A lot of times investors want to see some signs that there is a demand for whatever you are putting out there.
Why are you the right person to be starting this business?
The most important thing is, is there a demand for your product?
Not every business is meant for investors. Unless you have a business that is meant to scale and be a high-growth business. You have to have some liquidity event for an investor to want to join. Beyond that, you have to think more creatively. The people that are going to invest in you are the ones that know and believe in you. They are already a consumer of your product or service. The best way to fund your business is to offer what you need with the minimum amount of downside.
They are typically people who have found success in other parts of their life. Whether they have scaled a business and sold it and are wanting to invest in private companies. It’s not just venturing capital funds. They can write a check from 25k to 100k or more. Whereas VCs are putting in more money and want more percentage of the company and more red tape when it comes to venture capital companies.
How to find them:
There is a great website called www.angellist.com
Most angel investors have a thesis or an industry that they invest in more than others. You can also search on Linkedin. Always take stock of what you have, do you have anyone around you that could be an angel investor or is?
You have to convince someone. There are people who are investing for a whole host of reasons. There are a lot of different ways to go about it. Angel investors are less concerned about the return than a VC company. If you have an idea that you think is scalable, first and foremost is that your goal? Is this a business you want to own and operate forever or do you want liquidity in it?
It can be anytime. You can bring on an investor at just the idea stage. They need to believe in you and the founder is so important. When you are bringing on an investor super early they will take a lot from your business because your business isn’t worth anything yet. The earlier you bring on investors the more equity you have to give away because your company’s value is not very high.
How important it is to keep getting up again after being knocked down. It’s not are you going to get knocked down but how many times?
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