Getting Money For Your Business

Getting money for your business is something that every single entrepreneur wants, making it that much more of a competitive marketplace.

Here are a few of your options to get money in;

1. Banks
If you do not have collateral, this may not be an option. Banks are in this industry to make money, but they will protect themselves. If you are looking for $50,000 as a start-up and you do not have collateral or are willing to put your house up to secure this, it will be extremely difficult to get a loan or line of credit. With an existing business, you are in a better position and should start by asking a banker that you have built a relationship with.

2. Investors
If you are not willing to give away a portion of your business, this may not be an option. Investors will want a big piece of the action and most of them want control as they will want to make sure that their decision matters when it comes to the use of their money. Make sure that you bring in investors when you are willing to do this or when you have made your business' value high enough to support this investment while maintaining your majority share.

3. Government Grants & Loans
The government creates grants and loans to stimulate parts of the economy through businesses. Most of the government mandates are to support innovation and employment. Innovative grants and loans are in the technology, agriculture, diesel, education, medicine, and many other industries. However, many of these programs are tax rebates and loans rather than grants, and this trend is continuing as the government is seeking to incent established companies who would pursue this innovation regardless of having government financial support.
For employment, the mandate is to support unemployed or difficult to employ individuals. When applying for many of these programs, your company would have to ensure that you are helping the community and unemployed individuals who require this type of assistance.

4. Sales
Sales is self financing of a business and it is an excellent way for other options (governments, banks & investors) to be more interested in lending. Is there a way to get sales earlier? This is a good option to consider.

5. Family & Friends
This is your last resort, but also the most likely group to invest when you don't have sales and the rest of your options are gone.

Consider all of your options when seeking finance, but be realistic of what is needed with each option.

First Step In Writing a Business Plan

The first step in writing a business plan is not the numbers or explaining the product. In fact, the first step does not include ANY writing.

Your first step of a business plan: Identify Why You Are Writing It

For example, if you are writing a business plan just to guide your own actions in the upcoming months, that business plan is going to have different content and look very different than something prepared for the bank.

Why is this step so important? By knowing the reason for your business plan and its audience, you are able to make your business plan more effective in whatever purpose you have selected.

Here are some examples of different business plan audiences, and the format of the business plan;

The Bank
Institutions know exactly what type of information they want in order to grant you a loan or a line of credit. So use their templates that are found on their websites, as you know that they'll be getting what they want. This increases the likelihood that you will be getting a loan. A standard business plan for a bank is over 20 pages in length.

Private Investors
Individuals are a little different than a bank. Sometimes a document isn't required as much as a presentation! There should be an emphasis on the numbers as they want you to 'show them the money'. But this plan would look very different than something you give to a bank.

The 3 Fs: Family, Friends, Fools
Family, friends, and fools are the most likely individuals to support a start-up. These individuals will be very interested in the 'how' you are going to do things and watching you get sales and traction. To convince the 3Fs to contribute time or money, you can imagine this will be a different approach.

Employees, Customers, Suppliers, and Other Stakeholders
There are times that you will show people your business plan just to ensure that they want to do business with you. These types would be less numbers and content heavy. Write about the values and what makes the company different, plus it would probably be under 10 pages.

Yourself
Business plans are often written just to help the owner of a company organize themselves and test their concept. This would be action oriented with sales forecasts and a budget. Sometimes these are only 1 page in length or up to 5 pages making them flexible to the ongoing changes within a business.

By starting with the 'why' in a business plan, you will end up with a better plan.