How To Raise Capital For Your Business (seo)

November 1st, 2008 admin Posted in business |

By Irish Taylor

Anyone who plans to start up a business needs to prepare enough funding. Before venturing in any business, you need to sit and examine your financial capability objectively.

* Do you have sufficient saving in your accounts?

* Do you have personal investments such as stocks or bonds that you can use?

Some aspiring entrepreneurs rely solely on their retirement funds as a start up financing. However, although you may have a retirement plan, it is not always advisable to use this money for business financing. What if you dont have enough resources to start up a business?

There are other ways to raise a business capital such as acquiring a loan and using equity. By acquiring a loan, youll instantly get the funding you need and repay it according to the payment terms you and your lender have agreed upon. On the other hand, obtaining a sum from equity financing requires you to sell portions of your business to investors.

Acquiring a loan

Where can you apply for a business loan? Banking institutions, lending firms, credit unions are all possible loan providers that you can turn to. Generally, in order to qualify for a loan, these companies would require you to submit a business plan along with your application.

In most cases, lending companies will look into your personal credit history as a basis of your credibility as a borrower since you are just planning to start up the business and you dont have an existing business account to present. Thus, it is a good idea to check on your credit report. An excellent credit score will allow you to get easy approval and better rates as well. If you wish to obtain a loan, make sure youve prepared all the documents necessary for approval and processing of your loan.

Another way to raise capital without worrying about your credit report is to borrow from your relatives or friends. If you have friends or relatives who have financial means that you can turn to, it is also an easier way to obtain the capital you need. One important thing to remember when dealing with friends or relatives about money is the necessity of a written contract. This can sometimes be overlooked because of close relationships but a written contract will be invaluable in case problems arise in the future.

Raising through Equity financing

As weve mentioned above, equity financing involves some partnerships in your business. Most businesses have started up through the help of angel investors who have funded portions of the business. Angel investors maybe individuals, investment associations or venture capital firms who provide business financing.

With equity financing, it may be necessary to get a least three or more investors to gather enough money as a start up financing. In this case, you would need to set appointments with each of your prospective investors and convince them to accept the partnership.

One outstanding disadvantage of getting investors is that they could demand to have some control in managing the business. If youve made arrangements with several investors, conflicts with regards to some decisions may be inevitable. Nevertheless, these problems can be avoided by putting all details of the arrangement in the contract signed by you and your investors.

Anyone who plans to start up a business needs to prepare enough funding. Before venturing in any business, you need to sit and examine your financial capability objectively.

* Do you have sufficient saving in your accounts?

* Do you have personal investments such as stocks or bonds that you can use?

Beat the Credit Squeeze With Flexible Business Finance
By Ben Needles

The credit squeeze is a fact of business life and is not just about money but confidence in the market too. There are always winners and losers in every business situation and confidence and business finance can beat the credit crunch.

1. Ensure the bookkeeping and financial accounts of the business are up to date.

Keeping the accounting records up to date is an essential first step to ensuring the business owner knows exactly where the business stands. Reviewing recent financial performance and taking positive action to increase sales and margins where possible and control costs by eliminating waste protects the business from surprises and downturns.

By having available the recent costs, views and action can be taken to reduce those costs and in some circumstances to increase business costs where the profit potential is highest. For example a detailed examination of advertising and promotion costs may indicate some campaigns should be reduced while the money saved invested in better performing areas.

Not all sales produce the same profit for the business. By concentrating efforts on the highest profit margin products and services the effect on working capital can be reduced which can take the pressure off working capital funding.

2. Preparing a realistic business plan can help the business plan ahead.

Many small businesses prepare a business plan when starting up especially if government grants or business finance is to be applied for. Failing to prepare an updated business plan during a credit squeeze can be a plan to fail.

During a credit squeeze a business can find itself operating in an unstable market where the rules and actions of the past might not be evident in the future. Banks increase the cost of borrowing, customers save money by leaving the market and sometimes failing to pay or at least taking longer. Suppliers tighten their grip by increasing prices and demanding tighter payment periods.

Business takes steps to protect income, cash flow, liquidity and in extreme cases survival. That is why failing to meet these new challenges is a plan to fail.

Prepare a business plan on the basis of the recent history and extend the financial results forward following the recent trends. Input into the financial forecast the opportunities that can be exploited to increase business and take a realistic view of the potential negative factors that may be suffered.

The business plan should include both a written view of the next twelve months ahead and include a profit and loss account reflecting the optimistic view and the most negative view with contingency plans should the worse scenario become a fact. A cash flow statement calculated from the business plan to show the effects on liquidity is a vital tool.

3. Improve financial flexibility to increase the business finance options.

Arrange the business finances with more than one bank and increase the number of financing options. A single bank may not offer the size of overdraft or loan facilities or the competitive rates the business requires. View the financial market as a competition between suppliers for your business finance and utilise several to spread the finance between them.

By maximising financial flexibility options for bank accounts, loans and overdrafts and financing asset purchases the effect on business progress can be minimised. Consider leasing agreements, invoice factoring and other specialist financial institutions in addition to the main bank account provider. Cash flow and working capital requirements are crucial.

4. Go out and get more sales.

When sales go down it is easy to become depressed. Fight it and remember how the business obtained new sales channels and customers in the past and exploit the opportunities in the future. Focus on the unique selling points of the business and its products and revitalise campaigns to increase sales.

Consider sales and product diversification into both related and other areas. There are always new opportunities including new products and markets, selling existing products to a wider audience including increased geographical presence. It may help to list all sales activities in sales channels and look for more sales channels in which they company can operate.

5. Ask for professional advice and assistance.

Increase the level of communication with each professional advisor including accountants, financial advisors, solicitors, bank managers and business advisors and any managers of financial institutions. The more the merrier and by keeping in touch more opportunities and more favourable responses will be possible.

There is no such thing as a silly question when the future of the business and its employees are at risk. Discussing options with a variety of professional advisors increases those options and if increased business finance is required for growth or survival in the future, the higher level of personal dialogue will ease that route forward.

About the Author (text)

Terry Cartwright of DIY Accounting designs small business accounting software http://www.diyaccounting.co.uk/ on excel spreadsheets providing complete bookkeeping and tax solutions and business finance options at http://www.diyaccounting.co.uk/financial_services.htm

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Hungry? Good - Now Focus To Succeed With Your Investments
By Chris McClelland

It seems to me lately that everyone wants to become wealthy, and everyone wants it to happen to them. Even more so, no one wants to wait for wealth to come to them, they want riches to flow to them and they are willing to try anything to make it happen. This is what I refer to as “the hunger”, the drive, the force that drives people like me and you to set our goals high and then set out to achieve them. “The Hunger” is a must have for financial success as well as broader success in life. However, few of us truly stop to think before we leap with our investments; to truly understand what we are getting ourselves into. A carefully laid out plan to success is not only as important as having “the hunger, but in a lot of cases, is the difference between our investments being lucrative or all familiar flops.

Desire first, and plan second. There is nothing wrong with desiring wealth, it is perfectly logical. With wealth comes power, recognition, and the ability to have or change almost anything. Dreams come true, and doors open that otherwise might have been closed. In fact, I encourage thinking about your wants and desires; it is the single most effective way to understand what you want out of life. Now that you know what you want its time to lay the groundwork.

Because everyone has a different desire, everyone’s plan to success will be different. Factors such as time, income, and working capital come into play, but there are many ways in which everyone’s plan should be the same. A plan must have a start and an end; without which a path cannot be made to connect the two. The start must describe you as you are now with all truths revealed, the more information you list the better. This helps to establish a “true starting point” as well as an important honest acknowledgment of yourself. Things that might be included could be your age, current income minus debits, working capital (savings), time frame restrictions (moving, school, retirement, etc.). The end must be equally truthful and honest if your desire is to be a millionaire, have a clothing line, run your own successful law firm, or retire in 5 years then write it down along with all other goals/desires that you have. The more the merrier, your desires need to be written out.

The correction is in the connection. I give out advice a lot to people, mostly on how to get from point A to point B, but I tell them they are looking at it wrong. The best way to from A to B is to go from A to C. A is the start, B is the middle, and C is the end. Most people can only see what they have, and know only what they want.

The middle is simple, and should start simple; the simpler the better. Baby steps helps you succeed here, because we are looking for success not failure. Want to turn $10,000 into $1,000,000 in 5 years? Sit down, grab a pen, and find out mathematically what that comes down to a month. If you hit a wall; find a solution, or an idea. Will the increase in equity come from working more hours, making good investment decisions, or starting a new business? What is your backup plan? How do you plan to carry each task out? Create. Solve. Evolve. The middle is a jigsaw puzzle, include backup plans; use real numbers not guesses for success. Do not lie to yourself in your attempt to get from A to C, it will almost always lead to failure. Create steps that are attainable in order to give yourself a sense of accomplishment when you complete them. When you are done, know that you are focused and that your goals are within your grasp. Soon you will hunger no more.

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