You may have an innovative idea, and also conduct the idea assessment, for instance, through our Idea Evaluator service. But if you wish to obtain financing to your new business these will probably be not sufficient; you will have to develop a more compressive financial plan to demonstrate to a lender or investor that your business idea will be successful.
When you are planning to launch a new business you will have to incur costs before your company will become operational. By careful estimation of your startup expenses you can decide whether you can meet startup financial needs yourself or whether you will need to additional funding from bank loans, equity investors or government.
Planning4business can help you develop financial plan to support your funding application. We can also help you assess government grant programs and business incentive to help developing innovative small business. Remember that it often takes twice as much money as we anticipate. So plan accordingly. You can use these basics recommendations when developing your financial plan.
There are two basic types of funding sources available for a small business – equity and debt. Many financial institutions and investors consider past experience in the line of business as crucial to success. If you seek financing, be prepared to explain how your previous experience will contribute to your success as a business owner. The accepted practice is to develop a financing proposal. The proposal should at least include a brief description of your planned business, a summary of the requested loan, how the funds will be used and repaid, management resumes, a personal financial statement, and a projected income statement for the first year. Remember that financial institutions rarely provide all of the funds required by a business, and banks will expect that you put a part of the necessary funds into the business yourself. You personal monetary investment shows that you are truly committed to your business and believe in success of your business venture. Additionally, when evaluating your loan application, a bank will examine your cash flow, collateral, your credit history and history of business’s retained earnings.
Be prepared with a financial plan. The financial proposal is your best tool for communicating your business objectives and expertise to a loan officer. If you are seeking to raise money from equity investors you must develop a business plan and an investor presentation. That is the first thing the venture capital firm will ask for. Keep in mind that, according to recently published article at Forbes, less than 1% of business start-ups receive funding from venture capital.
Raising capital is an ongoing activity throughout the life of your company. Thus, having up-to-date financial plan is useful when seeking additional capital to your business.
Planning4business can help your prepare a financial plan for your business or provide independent review of your plan if you have developed one already.