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 places 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.
