Business Loan-How to Finance Your Business
Contrary to popular belief, business plans do not generate business financing. While there are many types of financing options that require a business plan, no one is investing in a business plan. atmospherians.com has more details
Investors need a business plan as a document that communicates ideas and information, but they invest in a company, a product, and people.
Myths of financing small businesses
Venture capital is a growing opportunity for corporate finance. In reality, venture capital financing is very rare. I will explain later but suppose that very few high-growth projects with large power management teams are development opportunities. Bank loans are the most likely option for financing a new business. In fact, banks do not finance business start-ups. I have more about it later. Banks are not invited to invest depositors. money in new businesses.
Business plans sell investors. In fact, they do not have a well written and convincing business plan (and pitch), they can sell their business idea to investors, but you will also need to convince the investors you are worth investing in. It’s all about knowing if you’re the right person to run your business, just like the viability of your business idea.
I’m not saying you should not have a business plan. You should. Your business plan is an essential part of the financing puzzle. It explains exactly how much you need and where you will win it, and how long it will take to get it back. Everyone you talk to will expect to see your business plan. But depending on the type of business you have and the opportunities you have on the market, you need to tailor your search for financing and your approach. Do not waste your time looking for the wrong kind of funding.
Where to look for money
The process of finding money must match the needs of the business. Searching for money and finding money depends on your business and the type of money you need. For example, there is an intense difference between a growing Internet-based society seeking second-rate financing and a local retail store looking to fund a second site.
In the following sections of this article, I will talk more specifically about the different types of investments and loans available to help you finance your business.
Venture capital activities are often poorly understood. Many start-ups refuse capital companies to not invest in new ventures or risky projects. People talk about venture capitalists as sharks, because of their so-called predatory business practices, or sheep, because they think so-called a herd, all wanting the same types of transactions.
This is not the case. Venture capital business is just a business. The people we call venture capitalists are business people who invest money from other people. They have the professional responsibility to reduce the risks as much as possible. They should not take more risk than is absolutely necessary to produce the risk/return ratios that the sources of their capital requirements.
Venture capital should be considered as a source of funding for only a few rare start-up companies. Venture capital can not afford to invest in start-ups unless there is a rare combination of product opportunities, business opportunities and proven management. A venture capital investment must have a reasonable chance of producing a tenfold commercial value within three years. It needs to focus on new products and markets that can reasonably expect to increase sales by huge multiples over a short period. He needs to work with proven managers who have been dealing with successful start-ups in the past.
If you are a potential venture capital investment, you probably already know it. You have members of the management team who have already experienced this. You can convince yourself and a room full of smart people that your business can grow ten times in three years.
If you have to ask yourself if your new venture is a venture capital opportunity, this is probably not the case. People working in new growth industries, multimedia communications, biotechnology or remote high-tech industries are generally aware of the possibilities for venture capital and venture capital.
If you are looking for names and addresses of venture capitalists, start with the Internet.
The names and addresses of venture capital firms are also available in a few annual directories:
The Western Association of Venture Capitalists publishes an annual directory. This organization includes most of California’s venture capital firms based in Menlo Park, California, home to an impressive percentage of venture capital firms in the country.
Kind of venture capital: angels and others
Venture capital is not the only source of investment for start-ups or small businesses. Many companies are funded by small investors in what is called “private placement”. For example, in some areas, groups of potential investors meet occasionally to hear proposals. There are also wealthy individuals who can sometimes invest in new businesses. In the area of business creation, investor groups are often referred to as “doctors and dentists” and individual investors are often referred to as “angels”. Many entrepreneurs are turning to friends and family to invest.