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How to Raise Money to start Business and Where to get Money for Business 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.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.honest
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.legitimate
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!
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