Raising money for your company needs much thought:You also have to convince serious people that you really need the money and excite them into giving, investing or lending it to you. Be prepared to spend some time on this project. It may be the most important ‘SALE’ you ever make. So you must get it right.This chapter covers the raising of money from a variety of sources and explains how to go about it. It contains details of:
Preparing Your Business Plan
You cannot expect to persuade people to invest in the future
of your business unless you have a clear idea of where it is going. You must have a prepared plan which you can explain to anyone interested in helping you. You often hear stories about people who start enterprises without planning them but in reality it does not happen. Whatever your idea is it will need to be thought about and that is the first stage of your plan. You must then go into more detail. Each step must be considered together with any alternatives until you are sure it will achieve the objective you are seeking.
So What Is A Business Plan?
A business plan can be prepared at any time. It projects your business into the future and tries to forecast what will happen. But you must have firm objectives first. It is a financial model of the future as far as your company or business is concerned.
What Will It Contain?
Your plan should contain the following:
- your ultimate goal
- the products or services you intend to sell
- what you will charge for the products or services
- how you will promote the business
- where you think your market is
- who your competitors are
- how you intend to manage the finances
- calculation of your break even point, ie the smallest amount of sales which in theory produce neither a profit nor a loss
- details of premises, equipment, vehicles, etc
- staff details
- personal details
- a cash flow forecast of the expected movements in cash over the next one or two years.
You should write up this plan as logically as you can and then re-read it to see if you can improve it. The idea is to give the potential reader a realistic summary of the current position and an optimistic view of the future without being too over confident. Over confidence may lead to some scepticism by the recipient. When you are satisfied that the plan tells the story as you see it you must check that your cash flow figures are in accordance.
Make sure you are totally familiar with all the aspects of the plan. You must expect to be questioned in depth about its contents.
Now you are armed with a reliable business plan you can face possible lenders of money with confidence.
Case Study: Hannah Prepares A Business Plan
Hannah and Usha are getting very busy and realise that they will soon be working more hours than there are available. They agree to take somebody on to teach their trade to, but this will take time and therefore money. Hannah remembers from her studies that businesses should have a plan so she volunteers to prepare a plan of where the business is going
and what funds will be needed to achieve it. She contacts the bank manager who sends her an outline plan which she works through, answering all the questions on the form. When this is complete Usha puts the finished product on the computer so that any adjustments that might have to be made can easily be done and for reproducing it when it is needed. A very useful job done.