The common questions
for anyone who want to start business are: How to raise money to start
business, and where to get money for my business?
To raise money to start
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. We will help you for where you can get money for business.
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 should
include a listing of your business and personal assets with
documentation---usually copies of your tax returns for the past three years or
more. Your prospective investor may not know anything about you or your
business, but if he wants to know, he can pick up his telephone and know
everything there is to know within 24 hours. The point here is, don't ever try
to "con" a potential investor. Be honest with him. Lay all the facts
on the table for him. In most cases, if you've got a good idea and you've done your
homework properly, and "interested investor" will understand your
position and offer more help than you dared to ask.
When you have your
prospectus prepared, know how much money you want, exactly how it will be used,
and how you intend to repay it, you're ready to start looking for investors.
As simple as it
seems, one of the easiest ways of raising money is by advertising in a
newspaper or a national publication featuring such ads. Your ad should state
the amount of money you want--always ask for more money than you have room for
negotiating. Your ad should also state the type of business involved ( to
separate the curious from the truly interested), and the kind of return you're
promising on the investment.
Take a page from the
party plan merchandisers. Set up a party and invite your friends over. Explain
your business plan, the profit potential, and how much you need. Give them each
a copy of your prospectus and ask that they pledge a thousand dollars as a
non-participating partner in your business. Check with the current tax
regulations. You may be allowed up to 25 partners in Sub Chapter S enterprises,
opening the door for anyone to gather a group of friends around himself with
something to offer them in return for their assistance in capitalizing his
business.
You can also issue
and sell up to $300,000 worth of stock in your company without going through
the Federal Trade Commission. You'll need the help of an attorney to do this,
however, and of course a good tax accountant as well wouldn't hurt.
It's always a good
idea to have an attorney and an accountant help you make up your business
prospectus. As you explain your plan to them, and ask for their advice,
casually ask them if they'd mind letting you know of, or steer your way any
potential investors they might happen to meet. Do the same with your banker.
Give him a copy of your prospectus and ask him if he'd look it over and offer
any suggestions for improving it, and of course, let you know of any potential
investors. In either case, it's always a good idea to let them know you're
willing to pay a "finder's 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 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
of 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 directories 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're 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.
Start thinking about
the idea of inviting investors to share in your business as silent partners.
Think about the idea of obtaining financing for a primary business by arranging
financing for another business that will support the start-up, establishment
and developing of the primary business. Consider the feasibility of merging
with a company that's already organized, 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 co-sign 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 invest. There's more money now than there's ever been for a 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 for you!
Now you should get
idea for how to raise money to start business, how to get money for business,
and where to get money for my business.
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Julia Tang publishes Smart Online Business Tips, a fresh and informative
newsletter dedicated to supporting people like you! To find out the best online
business opportunities, and to discover hundreds more proven and practical
internet marketing secrets, plus FREE internet marketing products worth over
$200, visit: [http://www.best-internet-businesses.com]
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