Taking the plunge and deciding to start a business can be a very exciting experience. You’ve probably been mulling over your idea for a product or service for a long time, and fantasising about reclining behind your massive oak desk in your skyscraper office. While managing a profitable business can certainly be fun, there are many more tedious things you’ll need to get through. One of these is securing the necessary funds to get your business off the ground in the first place. Here are some of the essentials for going about this.
When you’re looking to quit your day job and become a business owner, you won’t make it far without a solid business plan. This should be a detailed map of where you want your idea to go in the next three to five years. It should cover many different components, and be a living document (flexible enough to change and evolve as the needs of the business change). Your first step in drafting a business plan should be setting out a thoughtful summary which includes the entirety of the business plan, references your goals and your intended profile of the business. The company description should be full of details as to what the business does, what sets it apart from the competition, and the section of the market you’ll be targeting. As the old saying goes, “failing to plan is planning to fail”.
Another big essential to securing the funds for your business is detailed financial projections. If you walked into a meeting with any good business finance broker with nothing in the way of financial projections, you can be sure that they’re not going to approve a loan! When you have solid financial projections, it will show prospective stakeholders a detailed picture of where you intend your company to go in the years after its launch. Sure, you can include your hopes and dreams in this section. However, they need to be backed up by hard facts. Don’t touch your projections until you’ve carried out some detailed market analysis, weighed up the risks and expenses, and used these to outline clear and realistic objectives. This will show potential stakeholders why they should invest in you, and allow you to allocate your resources more effectively.
Once you’ve drafted a detailed business plan and realistic projections, it’s time to get down to actually popping the question through your funding request. This needs to include an exact figure on the amount of funding your venture is going to need, along with projections for returns over the next few years. Exactly how you’re going to use the funding you receive should be explained in detail, along with the kind of funding you’d prefer and precise terms. You should follow all this up with any relevant financial plans you have in store for the future of your business. These could include debt repayment, selling the business, buyout plans, or ensuring that another entity acquires the business. If you’re thinking of multiple routes your business could take, explore each of them in detail.