How to raise money for starting a business
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How to raise money for starting a business

The task of raising money for a business is not as difficult as most people seem to think. This is especially true when you have an idea that can make you and your backers rich. Actually, there’s more money available for new business ventures than there are good business ideas. A very important rule of the game to learn: Any time you want to raise money, your first move should be to put together a proper prospectus. This prospectus should include a resume of your background, your education, training, experience and any other personal qualities that might be counted as an asset to your potential success. It’s also a good idea to list the various loans you’ve had in the past, what they were for, and your history in paying them off. You’ll have to explain in detail how the money you want is going to be used. If it’s for an existing business, you’ll need a profit and loss record for at least the preceding six months, and a plan showing how this additional money will produce greater profits. If it’s a new business, you’ll have to show your proposed business plan, your marketing research and projected costs, as well as anticipated income figures, with a summary for each year, over at least a three year period. It’ll be advantageous to you to base your cost estimates high, and your income projections on minimal returns. This will enable you to « ride through » those extreme « ups and downs » inherent in any beginning business. You should also describe what makes your business unique—how it differs form your competition and the opportunities for expansion or secondary products. This prospectus will have to state precisely what you’re offering the investor in return for the use of his money. He’ll want to know the percentage of interest you’re willing to pay, and whether monthly, quarterly or on an annual basis. Are you offering a certain percentage of the profits? A percentage of the business? A seat on your board of directories? An investor uses his money to make more money. He wants to make as much as he can, regardless whether it’s short term or long term deal. In order to attract him, interest him, and persuade him to « put up » the money you need, you’ll not only have to offer him an opportunity for big profits, but you’ll have to spell it out in detail, and further, back up your claims with proof from your marketing research. Venture investors are usually quite familiar with « high risk » proposals, yet they all want to minimize that risk as much as possible. Therefore, your prospectus...

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