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The Right And Wrong Ways To Raise Money

Financial EfficiencyFlimsy financing can undo even promising businesses.

A good idea is nice; solid execution even better. But none of it means much without the capital to support it all.

And it’s not just about finding financing–it’s about finding the right financing. Pair a promising company with a poor capital structure and you could be in business hell.

Take it from Consumer Products Company. (I have disguised the real name to save the owner the embarrassment.) CPC was started by a young entrepreneur with a new product. He obtained his funding from a rich investor to whom he sold a controlling stake.

This article originally appeared on Forbes.com.

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