Crowdfunding Your Busine by Pete Lorenco

I'm psyched to be a first-time homeowner. And of course, I'm always seeing something to upgrade-such as the basement, which I'd like to turn into a full-scale, thundering 3D media room.

Having grown up around a small, family-run business, I know that entrepreneurs get that same itch all the time. They can't help but see room for improvement or expansion-if only there were the funds.

One way to finance these kinds of dreams is through crowdfunding, crowdsourcing's close cousin. In fact, the Securities and Exchange Commission has proposed rules, likely to be finalized soon, that may broaden your crowdfunding options. That's good news for small businesses-and more specifically, for those firms that have organized records close at hand, who can show prospective investors how well they handle their books and prove to regulators that they're toeing the line.

Capital Ideas

In 2013, research firm Massolution projected that total global transactions carried out through crowdfunding sites would hit $5.1 by year's end, up from $2.7 billion in 2012. But for the small companies on the receiving end of this flurry, equity crowdfunding doesn't come cheap. The New York Times notes that, no matter the size of an offering, SEC compliance costs about $6,500 for the offering (according to the authority itself) and $4,000 for each annual report.

Who's sourcing all of this capital?

Private companies can now raise funds from wealthy accredited investors through sites such as Fundable, where it's possible to seek equity amounts from $10,000 to $10 million.

Kickstarter and Indiegogo, meanwhile, let organizations appeal for donations or offer rewards in exchange for cash commitments.

Other sites, such as SoMoLend, enable business owners to find loans online.

Proposed SEC rules would broaden equity crowdfunding, letting small companies that don't offer publicly traded stock sell shares online and raise funds from broad pools of smaller investors. As part of such a setup, a company could reap as much as $1 million from the public in a 12-month period.

Be Ready at the Starting Gate

Such unique capital infusions can spur the growth of your business. But keep in mind that adding investors will mean sharing your profits, and possibly your decision making. It's also important to be prepared for an expansion or any other change in your business, which calls for shaping up your records. This includes:

Getting your house in order. What's the best use of the money you could raise through crowdfunding? What effects-positive and negative-could it have on your business? If your records aren't organized and easy to find, you won't be able to answer these critical questions. Find a trusted partner to help you manage your files.

Getting ready to comply. Would you be prepared to comply with SEC rules? Under its proposal, companies would have to produce financial statements, tax returns and disclosures about their business and the offering. Given the growth in paperwork that outside investment might bring-disclosure of tax returns, P&Ls and other docs-companies should consider taking advantage of secure shredding, offsite records storage, tape backup and cloud solutions to maintain records integrity, confidentiality, access and efficiency.

Make the Most of New Opportunities

If crowdfunding helps you attract capital, outsourcing your filing and record maintenance tasks will let you and your staff invest time and new-found funds in the real work of running your growing business. What improvements are you looking to make?

While you ponder that, I'll go back to staring at the shag carpet and knotty pine paneling in the basement.

LINK:	http://blogs.ironmountain.com/2014/service-lines/small-business/crowdf...
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