How to Raise Your Business CapitalAuthor: Yvonne Skudder
Contrary to most people think, gathering your startup capital is not that hard. You just have to have the right ideas that you are sure can make you rich. Not just that, be sure you have established a good reputation and credibility - the most important things to get your investor's trust.About the Author:
So what's the first step? Build a proper prospectus! Include curriculum vitae of your education, training, experience, and accomplishments. Also include personal qualities that might be counted as an asset to your potential success.
It might also help to include a list of all the various loans you have had and to where you used those loans. Do not forget your history in paying them off.
Explain in detail the purpose of that money. Since it is for a new business, you will have to show your proposed business plan, your marketing research, and projected costs. Also put the anticipated income, with a summary for each, for at least the next three years.
It will be best to base your cost estimates high and your income projections in minimal returns. Businesses, especially those only starting up, have their ups and downs. Doing your financial estimates this way will help you go through these ups and downs.
Describe your proposed business in detail. Explain its uniqueness and how it differs from other competition. Also putting the possibilities of an expansion will help catch an attention.
State precisely in your prospectus what your investor will get in return for using their money. Define the percentage of interest that you are willing to pay him, and the period when you will pay. A good example is what happened with my friend. He lent his money to a farmer for agricultural purposes. In order to pay, this farmer gives my friend a partial of his crops every harvest time.
Attract your investor. Interest and persuade him to lend you his money by spelling out in details the benefits he will get for investing in your business. If possible, give him proofs from your marketing research.
Now that you have a proper prospectus, you now know how much money you want and how to use it, and how you intend to pay it, here are the ways to look for investors.
ADVERTISE. Nothing beats proper advertisements. Include in your ad how much money you want. State the nature of your business and the kind of return that you are promising on the investment.
DIRECT SELLING. This is really not selling but I like to call it that way. You directly "sell" your business proposal to people. Host a party and invite your friends over. Explain the business plan, the possible profit, and the needed startup capital. Give each of them your created prospectus. You can promise to make them your partner in exchange for their thousand dollars investment to your business. But of course, you must first know the rules for this partnership.
NETWORKING. Sounds like selling products, too, but I also like to use this term. Try talking to your lawyer, accountant, or banker. Show them your prospectus and ask for their advices. In addition, you might as well ask them if they knew someone who can be a possible investor to your business.
INVESTMENT COMPANIES. Don't forget that there are investment companies that were put up for this cause. Try looking for them in your local area and try approaching them. Show them your prospectus and explain to them the details of your business plan.
BROKERS. There are Money Brokers that will take your prospectus and do your job in finding investors. There are good brokers and not so good brokers. So since money brokers require payment, you might want to check them out first before releasing any money to them.
These are just some ways to raise money for your business capital. But this is just one part of it - getting money from investors. There are other ways to raise money, including garage sales, loans, and selling out your stocks. Either ways, it's your choice. Choose something that you think will be best for you and your business.
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