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Alternative Spa Financing
By: Mark E. Battersby
Posted: January 28, 2011, from the February 2011 issue of Skin Inc. magazine.
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Any quest for business funding should begin with an understanding of the various types of financing, where that funding may be found and at what cost. Or, put another way, what type of funding can best help the spa? Generally, there are two basic ways to fund the business: debt financing or equity financing. With debt financing, capital is received in the form of a loan that must be paid back. With equity financing, capital is received in exchange for part ownership in the spa.
Equity financing can come from a variety of sources, including the spa itself, the owner’s pockets or private investors. Remember, however, keeping control of your spa is more difficult when outside investors are involved.
Originally a term used to describe investors in Broadway shows, “angel” now refers to anyone who invests money in an entrepreneurial company. Angel investing has soared in recent years as a growing number of individuals seek better returns on their money than they can get from traditional investment vehicles. Among those classed as potential angels are those who provide services to a spa, such as lawyers, insurance agents or accountants. Angels may also be business associates that the owner or business are in regular contact with, such as suppliers or vendors, clients, employees and even the competition.
Whether you decide to obtain a loan through a financial institution or to explore an alternative form of financing, make sure to do thorough and complete research into each plausible option to decide which is best for your, your team members and your spa.
Mark E. Battersby has been providing professional prepared editorial material for magazines, newsletters, reports and websites for more than 25 years. Each week, his topical columns are syndicated in more than 65 publications. He also writes monthly columns for 14 trade magazines and has authored four books.