HOW,RAISE,MONEY,FOR,STARTING,B DIY HOW TO RAISE MONEY FOR STARTING A BUSINESS

Normal 0 false false false MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable{mso-style-name:"Table Normal";mso-tstyle-rowband-size:0;mso-tstyle-colband-size:0;mso-style-noshow:yes;mso-style-parent:"";mso-padding-alt:0in When starting a new work at home business it is very easy to become consumed by it. We spend so much time trying to get the business up and running that we may end up becoming burned out and lose our motivation. There is so much to learn and

HOW TO RAISE MONEY FOR STARTING A BUSINESSCopyright © Kevin PurfieldThe task of raising money for a business is not as difficult as mostpeople seem to think. This is especially true when you have an ideathat can make you and your backers rich. Actually, there's more moneyavailable for new business ventures than there are good business ideas.A very important rule of the game to learn: Anytime you want to raise money,your first move should be to put together a proper prospectus.This prospectus should include a resume of your background, your education,training, experience and any other personal qualities that might be countedas an asset to your potential success. It's also a good idea to listthe various loans you've had in the past, what they were for, and yourhistory in paying them off.You'll have to explain in detail how the money you want is goingto be used. If it's for an existing business, you'll need a profit andloss record for at least the preceding six months, and a plan showing howthis additional money will produce greater profits. If it's a new business,you'll have to show your proposed business plan, your marketing researchand projected costs, as well as anticipated income figures, with a summaryfor each year, over at least a three year period.It'll be advantageous to you to base your cost estimates high, and yourincome projections on minimal returns. This will enable you to "ride thru"those extreme "ups and downs" inherent in any beginning business. You should also describe what makes your business unique - how it differsfrom your competition, and the opportunities for expansion or secondary products.This prospectus will have to state precisely what you're offeringthe investor in return for the use of his money. He'll want to knowthe percentage of interest you're willing to pay, and whether monthly,quarterly or on an annual basis. Are you offering a certain percentageof the profits? A percentage of the business? A seat on your boardof directors?An investor uses his money to make more money. He wants to make as muchas he can, regardless whether it's a short term or long term deal. In order to attract him, interest him, and persuade him to "put up"the money you need, you'll not only have to offer him an opportunityfor big profits, but you'll have to spell it out in detail, and further,back up your claims with proof from your marketing research.Venture investors are usually quite familiar with "high risk" proposals,yet they all want to minimize that risk as much as possible. Therefore, your prospectus should include a listing of your business and personalassets with documentation - usually copies of your tax returns for thepast three years or more. Your prospective investor may not know anythingabout you or your business, but if he wants to know, he can pick up his telephone and know everything there is to know within 24 hours.The point here is, don't ever try to "con" a potential investor. Be honest with him. Lay all the facts on the table for him.In most cases, if you've got a good idea and you've done your homeworkproperly, an "interested investor" will understand your position and offermore help than you dared to ask.When you have your prospectus prepared, know how much money you want,exactly how it will be used, and how you intend to repay it, you're readyto start looking for investors.As simple as it seems, one of the easiest ways of raising money is byadvertising in a newspaper or a national publication featuring such ads.Your ad should state the amount of money you want - always ask for moremoney than you need so you have room for negotiating. Your ad shouldalso state the type of business involved (to separate the curious fromthe truly interested), and the kind of return you're promisingon the investment.Take a page from the party plan merchandisers. Set up a party and inviteyour friends over. Explain your business plan, the profit potentials,and how much you need. Give them each a copy of your prospectus and askthat they pledge a thousand dollars as a non-participating partner in yourbusiness. Check with the current tax regulations. You may be allowedup to 25 partners in Sub Chapter 5 enterprises, opening the door for anyoneto gather a group of friends around himself with something to offer themin return for their assistance in capitalizing his business.You can also issue and sell up to $300,000 worth of stock in your companywith out going through the Federal Trade Commission. You'll need the helpof an attorney to do this, however, and of course a good tax accountantas well wouldn't hurt.It's always a good idea to have an attorney and an accountant help youmake up your business prospectus. As you explain your plan to them,and ask for their advice, casually ask them if they'd mind letting youknow of, or steer your way any potential investors they might happen to meet.Do the same with your banker. Give him a copy of your prospectus and askhim if he'd look it over and offer any suggestions for improving it,and of course, let you know of any potential investors. In either case,it's always a good idea to let them know you're willing to pay a "finder'sfee" if you can be directed to the right investor.Professional people such as doctors and dentists are known to have atendency to join occupational investment groups. The next time you talkwith your doctor or dentist, give him a prospectus and explain your plan.He may want to invest on his own or perhaps set up an appointment for youto talk with the manager of his investment group. Either way, you winbecause when you're looking for money, it's essential that you get the wordout to as many potential investors as possible.Don't overlook the possibilities of the Small Business Investment Companiesin your area. Look them up in your telephone book under "Investment Services."These companies exist for the sole purpose of lending money to businesseswhich they feel have a good chance of making money. In many instances,they trade their help for a small interest in your company.Many states have Business Development Commissions whose goal is to assistin the establishment and growth of new businesses. Not only do they offerfavorable taxes and business expertise, most also offer money or facilitiesto help a new business get started. Your Chamber of Commerce is the place to check for further information on this idea.Industrial banks are usually much more amenable to making business loansthan regular banks, so be sure to check out these institutionsin your area. Insurance companies are prime sources of long term businesscapital, but each company varies its policies regarding the type of businessit will consider. Check your local agent for the name and address of theperson to contact. It's also quite possible to get the directorsof an other company to invest in your business. Look for a company thatcan benefit from your product or service. Also, be sure to check at yourpublic library for available foundation grants. These can be the finalanswer to all your money needs if your business is perceived to be relatedto the objectives and activities of the foundation.Finally, there's the Money Broker or Finder. These are the people who take your prospectus and circulate it with various known lenders orinvestors. They always require an up-front or retainer fee, and there'sno way they can guarantee to get you the loan or the money you want.There are many very good money brokers, and there are some that are notso good. They all take a percentage of the gross amount that's finally procured for your needs. The important thing is to check them out fully;find out about the successful loans or investment plans they've arranged, and what kind of investor contacts they have - all of this before you putup any front money or pay any retainer fees.There are many ways to raise money - from staging garage sales to sellingstocks. Don't make the mistake of thinking that the only place you can find the money you need is through the bank or finance company.Start thinking about the idea of inviting investors to share in your business as silent partners. Think about the idea of obtaining financing for a primary business by arranging financing for another businessthat will support the start-up, establishment and development of the primarybusiness. Consider the feasibility of merging with a company that's already organized, and with facilities that are compatible or relatedto your needs. Give some thought to the possibilities of getting thepeople supplying your production equipment to co-sign the loan you needfor start-up capital.Remember, there are thousands upon thousands of ways to obtain businessstart-up capital. This is truly the age of creative financing.Disregard the stories you hear of "tight money," and start making phonecalls, talking to people, and making appointments to discuss your planswith the people who have money to invest. There's more money now than there's ever been for new business investment. The problem is that mostbeginning "business builders" don't know what to believe or which way to turn for help. They tend to believe the stories of "tight money," and they set aside their plans for a business of their own until a timewhen start-up money might be easier to find. The truth is this: Now is the time to make your move. Now is the timeto act. The person with a truly viable business plan, and determinationto succeed, will make use of every possible idea that can be imagined. And the ideas I've suggested here should serve as just a few of the unlimitedsources of monetary help available and waiting for you!Resource Box ---------------------------------------------------------------Kevin Purfield owns the Wealth System Online Resource Directorywhere you can find everything you need to start,run and grow a home basedinternet business at:http://www.wealthsystemonline.com/pluginprofits.htm -------------------------------------------------------------