| Finding the capital you need to finance your | | | | providers that youand your business can help |
| business canbe a confusing and complicated | | | | them make lots more money. |
| process. Many great ideasstumble at this | | | | |
| stage of business building. | | | | You must be able to show you've got a real |
| | | | winner. Youmust do it without fluff or a |
| Yet, moving through this stage breathes life | | | | "come on, dream with me"embellishment. |
| into yourbusiness - giving it forward | | | | Therefore, you need a business plan. Agood |
| momentum like a roller coasterbarreling down | | | | one that shows you've done your homework and |
| the first big hill. Finding money is just | | | | knowthe "lay of the land." |
| amatter of being informed and choosing the | | | | |
| right path formoney to enter the business. | | | | Venture capital providers want to be sure |
| | | | their investmentis sound. They generally do |
| There are several options available to you | | | | this by taking ownership over apretty big |
| when searchingfor financing. Some methods of | | | | part of the company, and often require |
| raising funds are lessdifficult than others, | | | | controlof major portions of the business. |
| but all require some planning. Basicplanning | | | | This is so they can lookafter their |
| requires that you know the answer to these | | | | investment. |
| threequestions: | | | | |
| | | | Do they mess around with the little guy? On |
| 1. What will you use the money for? | | | | the whole,they don't want to fool around with |
| | | | little investments andthey are bully on |
| You must know exactly where the money will be | | | | companies that have high-growthpotential. |
| used. Youmust be specific, as generalities | | | | Gotta think big with these guys! |
| are recipes for disaster. | | | | |
| | | | A few sites that help businesses and capital |
| Carefully identify the areas where money | | | | providersmeet are vCapital.com, |
| should flow intoyour business. | | | | BusinessFinance.com,and |
| | | | |
| 2. How much money do you need? | | | | ==> Angels |
| | | | |
| You should calculate your needs to carry you | | | | An angel, or private investor, is a person |
| throughinitial startup and into your first | | | | looking forgood investment vehicles. This |
| several months ofoperation. It's necessary to | | | | person could be your nextdoor neighbor, your |
| have a realistic picture ofyour needs. Many | | | | dentist, or a local business owner. |
| businesses fail because the moneyruns out | | | | |
| before the business reaches profitability. | | | | Overall, angels are not loan-makers, they are |
| | | | investors. |
| 3. How will you pay back the money? | | | | |
| | | | As such, the degree of control and terms |
| You must have adequate cash flow from your | | | | under which youreceive seed money for your |
| business torepay the money to your source. | | | | business will depend on thearrangement |
| Before asking for funds,make sure your fiscal | | | | brokered between you and your angel. |
| projections and business integrityare soundly | | | | |
| argued in a good business plan. | | | | The key to finding an angel in your area is |
| | | | networking. |
| An integral part of a good business plan are | | | | |
| financialstatements for your business. You | | | | While you may not have an angel in your |
| need to show sufficientcash flow in your | | | | personal pool ofcontacts, by networking with |
| business for repayment. You do this | | | | others you can create a wordof mouth campaign |
| withinformation as found in an income | | | | that reaches the ears of privateinvestors. |
| statement, a balancesheet, and a projected | | | | |
| cash flow statement. | | | | Moving outside of your local area, you can |
| | | | begin asweeping search for private investors |
| SOURCES OF MONEY | | | | at |
| | | | |
| Here are some options for funding your small | | | | They maintain a list of thousandsof |
| business: | | | | potential investors. |
| | | | |
| ==> Credit Cards | | | | ==> SBA Microloans |
| | | | |
| One form of personal debt you should avoid is | | | | The Small Business Administration may be |
| cashadvances on your credit card. It's very | | | | helpful inconnecting you with a Microloan. |
| tempting and veryeasy to get cash this way. | | | | These loans areadministered by non-profit |
| If you do this you should pray. | | | | organizations that want tofoster economic |
| | | | development in your area. Contact |
| Pray with vigor. Then ask for forgiveness. | | | | yourregional SBA office for information on |
| This option isvery expensive and extremely | | | | this loan program. |
| risky. Credit cards shouldonly be used for | | | | |
| short-term expenses, and not as a meansto | | | | You can find your local office using this |
| entirely fund a start-up business. | | | | online locator: |
| | | | |
| ==> Friends and Family | | | | ==> Small Business Investment Companies |
| | | | |
| Borrowing from your friends and family, | | | | The SBA or your local Chamber of Commerce may |
| especially therich ones, is a good way for | | | | be awareof Small Business Investment |
| new businesses to get money. | | | | Corporations operating in yourarea. These |
| | | | organizations are interested in |
| It's not uncommon for relatives to make low | | | | revivingdepressed portions of your community, |
| interest or nointerest loans to family | | | | bringing employmentto places with high |
| members. Just make sure allparties are aware | | | | unemployment, or even helping certainminority |
| of any risks. You don't want to alienateyour | | | | groups. They will work with new businesses if |
| family if the business falls on hard times | | | | youmeet the criteria they expect. You can |
| and youhave trouble repaying the loan. | | | | visit the American |
| | | | |
| ==> Personal Savings | | | | Economic Development Council for a list of |
| | | | organizationsin your area: |
| You can use your personal savings or assets | | | | |
| that can beconverted to cash. If your savings | | | | ==> Business Incubators |
| are already low, put offthat vacation, drive | | | | |
| your old car a bit longer, avoid | | | | Business Incubators help build new |
| largepurchases -- be thrifty in all areas and | | | | businesses. They canprovide help in all |
| you can savefaster for your business. Keep in | | | | phases of start-up, including funding. |
| mind that most lenderswon't finance 100 | | | | |
| percent of your business, so you'll needto | | | | Investigate whether or not an incubator |
| invest some money yourself. | | | | exists in your areawith the SBA, Chamber of |
| | | | Commerce, local universities, oryour local |
| ==> Line of Credit | | | | municipality. |
| | | | |
| If you have good credit, you may be able | | | | ==> Your Future Customers |
| secure a line ofcredit from your bank. This | | | | |
| can be handy in providing youwith a source of | | | | Your future customers may be a source of |
| working capital in the opening round ofyour | | | | money. This is aless conventional method, and |
| business. | | | | your timing must be right tocoordinate this |
| | | | type of deal. You simply take advanceorders |
| ==> Bank Loan | | | | for your product and collect at the time of |
| | | | theorder. If you take enough orders, you can |
| Using collateral, such as the equity in your | | | | search for alending institution which makes |
| home, you canapproach your bank for a loan | | | | loans against accountsreceivable. |
| against your business. Thismay or may not be | | | | |
| an option for you, since some banksprefer to | | | | In the final analysis, the name of the game |
| separate personal equity from business debt. | | | | is perseverance. |
| | | | |
| ==> Venture Capital | | | | Get your name and idea out there in the real |
| | | | world. Starttalking to people about your |
| People with lots of money love to make lots | | | | intent and become a player. |
| more money. | | | | |
| | | | Have your business plan ready, be aggressive, |
| Your job is to convince venture capital | | | | and you canget the money you need. |