For any investor to catch the vision of your proposed investment, certain bits and puzzles must
be put together. This article helps you in preparing a good business plan.
This is different from a business proposal proposing a deal or business transaction.
Clear Financial projections in the business plan.
There is no doubt that an effective business plan is needed to successfully raise capital. Included in a business plan should be a financial worksheet which outlines all the various categories of costs that can accrue monthly. By using a financial worksheet, the new business owner can provide lenders and investors three very important financial measures in order to raise capital; the income statement, cash flow statement, and balance sheet.
The income statement is probably the most important component of the three to raise capital. It includes a projected cost report, which provides projected revenues and the expected income for the new business owner in the next 3 to 5 years. Providing such financial predictions will enable the new business owner will gain credibility from their financial lenders. It also gives them an assertive edge to raise capital from additional sources.
Professionalism
Whether an entrepreneur decides to raise capital from traditional bank loans or from angel investors, new business owners will first have to impress them with their business plan. Your business plan must be well packaged, professionally paterned with coloured pages and statistical figures/diagrams where needed, without spelling errors, with precise and correct lexical content, such that every bit of information is clearly presented. In other words, must be excellent. Your buiness plan should contain virtually all the information about your company; aims, objectives, board executives. Proposed Terms of loan must be clearly written.
New business owners should be aware that despite the possibility of multiple rejections, they must not be discouraged and always keep a positive, professional attitude. If an entrepreneur strongly believes in their project, then they will seek any and all means to raise capital. If an investor or financial lender sees potential in an entrepreneur’s new business ideas, then they will strongly consider the opportunity to enable the new business owner to raise capital and provide funding for their new business endeavor.
Good credit vs. bad credit
Credit rating has become a very significant component when a new business owner decides to raise capital. This policy holds true for every financial lender: the higher the credit score, the lower the interest rates. If a new business owner has bad credit ratings, such as 600 and below, then they will most likely not be able to effectively raise capital since there is a high probability that their loan application will be denied. The entrepreneurs that seek to raise capital for their new business in large amounts and are planning to borrow this money from a bank should try to monitor their credit score and fix their credit history beforehand so that they can get new business loans at favorable rates. There is no doubt that a high credit score is a vital component to raise capital for a new business.
A few years ago, there were several financial institutions and banks with a scoring rank system that automatically determined the new business owner’s interest rates. However, nowadays, there are multiple credit rating agencies that diligently analyze the new business owner’s credit score before granting capital. For a new business to effectively raise capital, the new business owner must have a good credit rating.
Many entrepreneurs will agree that it is not an easy task to raise capital for their new business.
The credit score agencies can easily determine the credit ratings of an entrepreneur simply by collecting information on the new business and analyzing the details, such as the borrower’s current income level, payment and debt history, and other important financial facts that may be useful in the process to raise capital. After credit agencies obtain a detailed report on the borrower, this information is sold to loan providing organizations, which further determine the amount of capital to be allocated. Whether an entrepreneur is seeking funding from a private investor or lending institution, their credit history will be investigated before they are able to raise capital for their new business.
Please post your comments for clarification of any aspect unclear to you, i'll readily assist you.
Like our facebook page if you havent
Joseph Uwaifo.
related articles:
No comments:
Post a Comment