HOW TO RAISE MONEY FOR STARTING YOUR OWN 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: Anytime 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 which 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 proceeding 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 will 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 "up and downs" inherent in any
start-up business.
You should also describe what makes your business unique - how it
differs from 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 that will be paid 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 directors?
Start thinking about the idea of inviting investors to share in
your business as silent partners.
Think about the idea of obtaining finance for a primary business
by arranging financing for another business that will support the
start up, establishment and development of the primary business.
Consider the feasibility of merging with a company that's already
organised, and with facilities that are compatible or related to
your needs.
Give some thought to the possibilities of getting the people
supplying your production equipment to guarantee the loan you need
for start up capital.
Remember, there are thousands upon thousands of ways to obtain
business start up capital.
This is truly the age of creative financing.
Disregard the stories you hear of "tight money" and start making
phone calls, talking to people, and making appointments to discuss
your plans with the people who have money to invest. There's more
money now than there's ever been for new business investment.
The problem is that most beginning "business builders" don't know
what to believe or which way to turn for help.
They tend to believe the stories of "tight money" and they set
aside their plans for a business of their own until a time when
start up money might be easier to find.
The truth is this:
Now is the time to make your move. Now is the time to act.
The person with a truly viable business plan, and determination to
succeed, will make use of every possible idea that can be
imagined.
And the ideas I've suggested here should serve as just a few of
the unlimited sources of monetary help available and waiting.
It's always a good idea to let them know you're willing to pay a
"finders fee" if you can be directed to the right investor.
Professional people, such as doctors and dentists, are known to
have a tendency to join occupational investment groups.
The next time you talk with your doctor or dentist, give him a
prospectus and explain your plan.
He may want to invest on his own, or perhaps set up an appointment
for you to talk with the manager of his investment group.
Either way, you win because when you're looking for money, it's
essential that you get the word out to as many potential investors
as possible.
Don't overlook the possibilities of the Small Business Investment
Companies in your area.
Look them up in your telephone book under 'Investment Services'.
These companies exist for the sole purpose of lending money to
businesses which they feel have a good chance of making money.
In many instances, they trade their help for a small interest in
your company.
Many states have Business Development Commissions whose goal is to
assist in the establishment and growth of new businesses.
Not only do they offer favorable taxes and business expertise,
most also offer money or facilities to help a new business get
started. Your Chamber of Commerce is the place to check for
further information on this idea.
Industrial banks are usually much more amenable to making business
loans than regular banks, so be sure to check out these
institutions in your area.
Insurance companies are prime sources of long term business
capital, but each company varies its policies regarding the type
of business it will consider.
Check your local agent for the name and address of the person to
contact.
It's also quite possible to get the directors of another company
to invest in your business.
Look for a company that can benefit from your product or service.
Also, be sure to check at your public library for available
foundation grants. These can be the final answer to all your
money needs if your business is perceived to be related to the
objectives and activities of the foundation
Finally, there's the Money Broker or finder.
These are the people who take your prospectus and circulate it
with various known lenders or investors. They always require an
up front or retainer fee, and there's no way they can guarantee
to get you the loan or the money you want.
There are many very good money brokers, and there are some that
are not so good.
They all take a percentage of the gross amount that's finally
procured for your needs.
The important thing is to check them out fully; find out about the
successful loans or investment plans they've arranged, and what
kind of investor contacts they have, all of this before you put up
any front money or pay any retainer fees.
There are many ways to raise money, from staging garage sales to
selling stocks.
Don't make the mistake of thinking that the only place you can
find the money you need is through the bank or finance company.
