When should you get outside investors? When is the right time and when is the wrong time?

You should try to tap all the other resources available like SBA, family or friends before you seek venture capital. Many want to get very involved in your firm and soon you may lose control of it.

I agree getting outside investors should only be done as a last resort. If you have a big idea and you need to grow it rapidly - you may want to consider venture capital

Outside investors can be a great blessing if you have a great idea but little experience managing a business. Make sure you select investors that can add value to your business model.

Here are some advantages and disadvanteages which maybe helpful:

AdvantagesAttractive for businesses looking to bring in additional expertise as well as funding. Unlike loans and overdrafts, you do not normally have to make payments to investors until the business can afford them. Increasing the capital invested in the business makes it easier to borrow from the bank.

DisadvantagesYour share of the business, and of its profits, will be lower. Investors may want control over how you manage the business. Investors may want the business structured in a way that makes it easier to sell their shares in the future.

I agree with Bizwiz you have to approach potential investors like they were employees. Some of the questions you should ask are:

-Is this group going to add value to my business model?
-Does this group have experience in my space?
-Will they fund me through my different stages?
-What are their objectives? How quickly will they want to go public?
-Are the financing terms competitive?