Seven steps to finance a startup business

Have a professionally-written business plan. Make sure your business plan includes a market analysis, cash flow projections, a marketing plan, debt coverage and any other data that is relevant to your start-up.Make sure that you have the right people on the project, particularly your management team. They need to have experience in the type of work your start-up does. For example, if you're trying to get funding for a cosmetics enterprise, it helps to have former cosmetic company executives on the management level. Have your own money on hand, either already invested into your start-up or at the ready for your start-up. When you have skin in the game, so to speak, the potential investor knows that you believe in the project and are willing to risk your own capital. You'll also need to be ready to pay for some third-party services, like legal, appraisal, escrow, marketing and other professionals that will help you get the business running.View the list »
First, the basics: start with how much money you'll actually need from investors to get your venture off the ground. Spend some time crunching the numbers for a realistic figure that will not only launch your business but also sustain it for a few months.

Small Business newsletter

Getting financing for your start-up isn't always easy. Plenty of people think that just having a great idea is enough, but it's not. Professional investors want to see more than just a great idea; they want to know that the entrepreneur is serious about the business and will deliver a return on their investments. Here are seven ways to prove that your start-up is a serious business contender, from Yury Iofe, MBA of Universal Business Structured Solution.

Related topics

Advertisement
View the list
  • First, the basics: start with how much money you'll actually need from investors to get your venture off the ground. Spend some time crunching the numbers for a realistic figure that will not only launch your business but also sustain it for a few months.
  • Have your own money on hand, either already invested into your start-up or at the ready for your start-up. When you have skin in the game, so to speak, the potential investor knows that you believe in the project and are willing to risk your own capital. You'll also need to be ready to pay for some third-party services, like legal, appraisal, escrow, marketing and other professionals that will help you get the business running.
  • Make sure that you have the right people on the project, particularly your management team. They need to have experience in the type of work your start-up does. For example, if you're trying to get funding for a cosmetics enterprise, it helps to have former cosmetic company executives on the management level. 
  • Have a professionally-written business plan. Make sure your business plan includes a market analysis, cash flow projections, a marketing plan, debt coverage and any other data that is relevant to your start-up.
  • Be organized. When you meet with a potential investor, give the impression that you're a serious businessperson by being completely prepared and completely professional. Create an online data room, and if the investor needs more information, make sure the investor gets it as quickly as possible. If it's something that can be emailed, don't let more than 24 hours go by before it lands in that investor's email inbox.
  • Disclose everything. Investors will conduct their due diligence, and during due diligence is not the time for surprises. If you're up-front about something that might be a red flag, mention it. For example, your last venture might have gone bankrupt because your business partner vanished with most of the bank account. Let the investor know that, particularly if your former business partner is now behind bars and completely out of your life.
  • Get a professional to calculate the value of your start-up. This becomes a starting point for investors and provides you with intelligent discussion points, adding to your professionalism and providing more proof to investors that you're serious about this business.
View the list
Suggested by the author:

, Springfield Entrepreneurship Examiner

An entrepreneur herself, Christine Parizo is the principal of Christine Parizo Communications and a freelance writer specializing in business and technology. She focuses on white papers and case studies for business-to-business (B2B) companies. Christine also works closely with entrepreneurs to...

Advertisement

Today's top buzz...