Equity Resources for Your Business
Confused yet? If you are – that’s normal. Equity is complicated and has a lot of moving parts. But for many small business owners, it’s definitely worth it.
If you think equity might be right for you, start by contacting your local SBA (small business administration) branch or an experienced business lawyer to learn more about the rules and regulations regarding equity in your state – and get some advice on how to go about growing, or getting your business off the ground.
If you need more info:
- call a trusted financial advisor.
- conduct a couple exploratory interviews with venture capitalists.
- talk to business owners who have “been there, done that.”
- hire a business lawyer to protect your interests.
- dive into some of the resources at the end of this guide.
How to Calculate Equity
As you get started, it’s worth understanding how to calculate shareholders’ equity, as it’s important to investors. To figure out an owner’s equity, you’ll need to calculate the assets and liabilities of their business.
Start by determining the company’s total assets- these are things that are in progress, inventory, cash, or other receivables. You’ll also need to figure out your debts and liabilities, including salaries and accounts payable. To calculate equity, you can subtract the liabilities from the assets. Accounting software can help you do this!
Resources to Help You on Your Equity Journey
We’re not the only one doling out information on equity. Check out these resources if you’re looking to learn more.
For Business Owners
- Debt vs. Equity Financing - NFIB
If you can’t trust the National Federation of Independent Business (NFIB), then who can you trust? NFIB’s explanation details the differences between debt and equity financing, helping you determine which is best for your business.
- Private Equity Articles - Inc.
Inc. has published a number of articles on the topic of private equity. Check out posts on why you need investors you can trust, why you might be repelling potential investors, and why it’s a good idea to take outside money.
- Owners Should Know What They’re Getting With Private Equity - The NY Times
The New York Times recently published an article about the dangers of private equity, particularly when it comes to additional clauses. Learn about Puneet Mehta, an entrepreneur, and his experiences with investors.
- Equity Compensation In-Depth Overview - SHRM
The Society for Human Resource Management is a go-to resource for professionals looking for info on how to hire and keep awesome employees. This in-depth article on equity compensation at private firms provides information on different types of equity, stock options, taxes, and more.
- The best way to divide startup equity - GeekWire
How should you divide up your equity? Hm, that’s a toughy! Mike Moyer, GeekWire contributor, discusses how optimism, time, and money are all part of the equity equation.
- How to calculate equity with calculator - Wikihow
Shareholders’ equity can be calculated to help business owners, investors, and employees determine how their business is doing. Investors will want to calculate equity to ensure that their investment is worthwhile.
- Starting Up on a Shoestring - Inc.
If you want to bootstrap your business, check out Inc.’s comprehensive list of bootstrapping articles. The list includes tons of stories of entrepreneurs who successfully bootstrapped.
- Bootstrapped, Profitable, & Proud - 37signals
37signals is famous for being both bootstrapped and profitable. They have a whole page dedicated to companies who didn’t take money from venture capitalists. Read Rework by founders Jason Fried and David Heinemeier Hansson for more info on bootstrapping.
- How to Bootstrap your Business - Entrepreneur
Erica Ziela, founder and CEO of Sitting Around, explains how moonlighting helped her succeed. She also discusses how keeping her day job allowed her to pour significant cash into her business.
- Bootstrapping Your Startup: 7 Hard-Earned Tips from Real Entrepreneurs - readwrite
Real entrepreneurs offer tips and tricks on how to bootstrap a business. These leaders discuss what they’ve learned from bootstrapping, its benefits, and what bootstrapping can do for you.
- Getting Paid in Equity: A What to Do Guide - Grasshopper
If you’re being offering compensation, how do you know if it’s worth it? You’ll need to assess the company’s ability to sell, as well as whether or not the equity is appropriate for your position. Part of the reason we put this guide together is because of the popularity of this post.
- Negotiating Your Startup Job Offer - Rob.by
Robby Grossman works in engineering at Wistia and has founded his own venture, PaperPhobic. On his personal blog, he discusses what terms are appropriate when negotiating a startup job offer, even providing info on how to calculate your offer.
- You’ve been offered shares. Now what? - Reuters
So, you’ve been offered some equity, but should you take it? Reuters discusses how accepting equity is a bit like playing poker, giving tips on how to increase your odds.
On Startup Incubators
- 10 Startup Incubators to Watch - Inc.
Startup incubators are a great way to get launched. If you’re in the market for a perfect fit, you might choose one off of Inc.’s recent list. Which ones are included? TechStars, Summer@Highland, Ben Franklin TechVentures, and others.
- 8 Reasons Startup Incubators are Better than Business School - Forbes
Sure, many small business owners and startup founders have business degrees, but startup incubators can also teach important skills to entrepreneurs. J.J. Colao, Forbes Contributor, explains why incubators are a great option.
- The Pros and Cons of Startup Accelerators - Mashable
Startup incubators and accelerators are great, but they’re not perfect. That’s why Mashable discusses the successes and failures of these programs. Will accelerators stick around? We’ll have to wait and see.
On Investment Networks and Crowdsourcing
- The Best Sites to Raise Money and Get Your Ideas Off the Ground -lifehacker
Crowdsourcing is a great way to raise money for your business, which is why solutions are cropping up all over the internet. Check out lifehacker’s list of the best sites to help you raise money to be a successful entrepreneur with a kick-butt company.
- 8 Kickstarter Alternatives You Should Know About -Mashable
Everyone knows about Kickstarter, but it’s certainly not the only crowdsourcing platform. Not only that, there might be one out there that’s better for you! Mashable’s put together an awesome list of Kickstarter alternatives that might suit your business.
- What online fundraising sites can be used for projects? -Quora
The best place to go to learn about fundraising? Somewhere where entrepreneurs hang out. Check out this Quora thread on which online fundraising sites will help you out. CEOs, co-founders, investors, and others weigh in with their ideas.