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Business

The “Secrets” to Successful Financing

1. Choosing the right sources of capital can be as important as choosing the right form of ownership or the right location

2. The money is out there; the key is knowing where to look

3. Raising money takes time and effort

4. Creativity counts.  Entrepreneurs have to be as creative in their searches for capital as they are in developing their business ideas

5. The Internet puts at entrepreneur’s fingertips vast resources of information that can lead to financing

6. Put social media to work to locate potential investors

7. Be thoroughly prepared before approaching lenders and investors

8. Entrepreneurs cannot overestimate the importance of making sure that the “chemistry” among themselves, their companies, and their funding sources is a good one

9. Plan an exit strategy

Raising Capital

  • Raising capital to launch or expand a business is a challenge
  • Many entrepreneurs are caught in a “credit crunch.”
  • Financing needs in the $100,000 to $3 million range may be the most challenging to fill

Financing a Business

  • Entrepreneurs must cast a wide net to capture the financing they need to launch their businesses
  • Layered financing – piecing together capital from multiple sources

Three Types of Capital

Capital is any form of wealth employed to produce more wealth for a firm.

1. Fixed – Used to purchase the permanent or fixed assets of the business (e.g., buildings, land, equipment, and others)

2. Working – Used to support the small company’s normal short-term operations (e.g., buy inventory, pay bills, wages, or salaries, and others)

3. Growth – Used to help the small business expand or change its primary direction

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