How to Attract Investors for Your New Business

If you own a business and are in need of financing, you may look to investors to pitch your plan and attract the kinds of investors that will be helpful to your business. This is especially true for existing business owners, new businesses and for small businesses. Before you approach an investor, you need a solid business plan in place. It must be written in a detailed format. That means, you will have to conduct market research and provide financial details to the reader. Your plan should be able to answer all the questions that the investor may have without hiding behind any insecurities or uncertainties. That means, you have to be honest, forthright and upfront. The investor will also look at your plan to see how astute you are about understanding the industry and the experience that you bring to the business.

Questions and Answers

Therefore, you should do the homework and communicate it to the investor in an effective and efficient manner. If you have to hire a freelance writer or outsource the market research to an expert, by all means do so. It would be helpful to also create a PowerPoint presentation with questions posed on each slide and the answers likewise provided. Here are some of the questions that the investor would like to be answered prior to making an investment into your business. Use this as a foundation in creating your business plan.

What type of problems is the product or service solving?

While, this may be an obvious answer, the investor wants to hear it from you. Yes, you may have innovative technology that has potential, but you have to lay out the issues that your technology will solve. Investors want to know how you will get the customers with the money to buy your product or service in order to solve their painful problems.

What type of solution does the business offer and what is the value proposition?

In the same breath, you should interest the investor into reading a brief description of your offer without laying out the confusing technicalities and terms that cannot be understood. You only have one time to talk briefly about any patents and other things that will differentiate you from the competitors.

What is the size and growth of the target and market segment?

Investors will want to know about the size of your market and industry. Is it sufficiently large for a return on their investment? Most investors like to see market growth and the expectation of something substantial. You have to find a way to wow investors into seeing the basis of your marketing expertise and experience as you provide valid figures in growth rates. If you don’t have that kind of experience, then show it by your research efforts with sources provided.

How will the business model make a profit?

Define your business model clearly to show profit potential. This means that you have to identify your potential customers, expected market penetration and total costs of investment for cash flow sustenance.

Who are the competition and how will the business stand out?

There will always be competition in any business. Be clear on how you aim to stand out amongst your competition. Instead of demeaning the competition, use ways to document their specifics while highlighting the advantage you have.

What is the marketing plan?

You must have a marketing plan with milestones, pricing, strategic partners, sales channels and industry as well as target segment.

What is the prediction for expenses, revenue and cash flow?

Document a forecast of expenses, revenue and cash flow. This will measure your level of commitment and business savvy. Use aggressive and not illogical numbers as it relates to market conditions and market size.

When will investors get their payout and how much?

This is one of the most important questions for investors. Formulate an exit strategy, showcasing how the investors will profit, how early will they get their payout and how much.

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When is it Time to File for Bankruptcy?

When you find yourself with excessive debt, it sometimes leaves you pondering about what to do to get rid of this debt. In many cases, the overwhelming debt forces some people to file for bankruptcy while others opt for debt consolidation or debt settlement. When is it time, however, to file for bankruptcy? Is there really a right time? There are some significant reasons why it may be a wise decision to file bankruptcy, but you have to consider it wisely and think about the consequences.

Handling Your Debts

Bankruptcy is like signing over your debts to oblivion. However, it could cost you greatly. You have to know how to handle those debts before it reaches the stage of no return. You can try title loans as a resort for not filing bankruptcy, but if you have to file, you need to be aware of the process and when it makes sense to just go ahead and take the plunge.

No Wiggle Room

There are certain circumstances where bankruptcy filing makes sense and can be of benefit to you. This is after you have tried negotiation with creditors and there is no other solution. At an attempt to negotiate with lenders and creditors, you find no wiggle room for progress; it is time to look into other means. If you cannot work out a repayment plan or the creditor just does not want to budge, you may have fewer options. At some stage in your financial life, you may have exhausted all opportunities for the lender to even listen to you or you may have forfeited a previous payment plan arrangement. So why would the lender even consider working out a repayment plan at this point? For that reason, the creditor may only be willing to accept full payment.

Liabilities and Assets

If you find that your liabilities are more than your income or assets, you may have to consider filing bankruptcy. For instance, if you owed the bank $400,000 on a debt where the monthly payment was $4,000 and you only had assets in the amount of $100,000 and income of $3,500 per month, you may have a few other alternatives than to file bankruptcy. However, if the debt was more and your income was lower, then you would have a debt problem that needed serious consideration of bankruptcy.

The Negative Consequences

There are some adverse consequences to filing bankruptcy at any time, even if this is your only option. In addition to feelings of failure, you will have to deal with the damage that filing bankruptcy would do to your credit rating. You may be able to borrow from a creditor or lender within two years of filing bankruptcy, but you would have to do so with a higher rate of interest and a higher monthly payment. The bankruptcy would also stay on your credit report for up to seven to ten years. Lenders and creditors will be leery of lending you money or offering credit.

No Hiding

There is no hiding behind a bankruptcy filing status since this is public record that anyone has access to. Bear in mind that this won’t be a personal matter anymore. Your debt will be known by anyone who has an interest in your financial affairs.

 


How to go about Preparing a Price Estimate or Quote

If you own a business, your product or service pricing is very important to your bottom line and also an essential part of customer satisfaction. You have to secure pricing for each product or service because when a customer calls and request an estimate, you have to be ready. You should spend a lot of time in the preparation process of pricing. Here are some tips.

The Price Quote

Quoting a price to a customer is simplified when you have a price list or an idea of the scope of the project. If you are selling products, it is easier to come up with a price quote. However, when you own a service oriented business, there is a lot that goes into giving a quote because not every project is the same. When the customer calls, you have to be able to ask the right questions to glean information necessary to provide a price quote. Therefore, employees need to be appropriately trained in this regard.

Prior to the Quote

When you receive an email or phone call from a customer or the customer visits the store and ask for an estimate or quote, you may not get enough details right away on the scope of the request. Before you even prepare the estimate, you have to take time to become familiar with the customer and his or her needs. If it is a large project, you may have to visit the customer’s home before giving an estimate. This is especially true for repairs and home remodeling projects. You also have to ask the customer a few questions prior to giving a quote such as:

  •       How far is your home?
  •       Is the home located within the service area?
  •       What is the time frame for the project to end?

If you cannot meet the customer’s specific needs, it is better to turn down the project from the beginning because you don’t want to waste your time or your customer’s time.

Going to the Home

There are some basic rules to visiting someone’s home as a contractor. You must keep any promises you made to your customer and be sure you arrive on time. If you have another project that is holding you up, be sure to contact the client and let them know beforehand. Be sure to portray professionalism at all times. While this doesn’t mean wearing a suit and tie, it means the right attire for your type of work with an extra pair of pants and shirt, if the project gets messy.

Pertinent Questions

Finally, be sure to ask all the pertinent questions so that you can give the customer the most accurate estimate. If it is a paint job, find out first, if the customer will provide the paint and other products for the project. If you are providing the necessary products, be sure to have an estimate or receipt of what was purchased. Find out exactly what the customer wants, every detail counts and you will deliver an accurate quote for the project.

 


Different Ways to Eliminate Financial Stress in Business

Most businesses carry certain periods of seasonality. What does this mean? It means that possibly the first quarter of the year is slow – from January to July and then picks up or the kind of business you do comes to almost an abrupt stand still as November and December comes around. Does that sound like yours? Does it create financial stress when this occurs? Well, if it does, there are several ways that you can eliminate financial stress in your business.

Budget Plan and Review

Make sure that you have a company budget, which is implemented ad planned for the whole year. Be sure to stick to the budget. Each month, you should review the budget. In your budget, you should incorporate a financial plan in how to handle the seasonality of your business and how the overall revenue will cover the cost for that period. Your balance sheet should project the fixed costs to run your business and the total overhead expenses. Not only should you have the standard budget plan, but also a budget for when you could break even. This will allow you to see if your business is underperforming and make concession for it.

Cash Flow Forecast

It is important to forecast your short term cash flow. Maintain a projected cash flow of at least ninety days. You would base this off of the existing payroll, revenue forecast for the period, receivables, and other items. Make sure that you do a weekly update and review with your management team. This is a great way to reduce financial stress in your business.

Financial Plan

You should always have a financial plan to cover for your cash shortcomings. In some businesses, there is enough money at the start of the year to handle any shortfalls of the future months. However, it is best to determine and establish the amount of cash flow that will be needed and have a line of credit handy to cover your tracks. If your company’s track record is desirable, your bank will not hesitate to loan you money to get through the tough season. However, you must have a financial plan to see whether you are going to need the help and how much help will be needed.

Maintain Core Competency

There are just some things that you should try to maintain in your business and that is core competency. You don’t want to deviate from that and cause irreparable damage to your reputation as a business owner; just to make a few extra dollars. Embrace the fact that your business is seasonal at certain periods of the year. Combat this with proper planning and budgeting. These are more effective ways than diversifying.

The Bottom Line

The important thing is to understand the nature of your business. Let budgeting and planning be the focus from the moment you decide to go into business. The more you exercise your right to understanding the business, budgeting for shortfalls and plan for a rainy day, the more you will reduce financial stress during seasonal times.

 


Finding the Most Effective Financial Solutions for your Small Business

If you are a small business owner, you should be concerned about capital and how you are going to get access to money when you need it. You also need to ensure that there is accessibility to the ideal solutions for improving your finances and cash flow. The question now is what are the precise financial solutions that small business owners can use to grow and develop their companies? In any business, you should be knowledgeable about different ways to streamline your operations and save money. There are several solutions to improve finances in any business. Let’s explore.

Access to Capital

Accessing capital is one of the most crucial issues that small business owners undergo. When considering a way around this, many of them look to:

  •       Lines of credit
  •       Commercial loans
  •       Personal loans
  •       SBA loans
  •       Leases
  •       Personal credit card

Other Choices

Small business loans from the SBA offer better interest rates and loan terms. Therefore, that would be the ideal place to look first. Beyond this, any of the solutions listed above can aid in the growth of revenue and the streamlining of business operations. However, there are a few other choices to look at such as:

  •       Business credit cards
  •       Remote Deposit
  •       Merchant Services

Merchant Services

If you are a small business owner, you can take advantage of merchant services as well. How? You should offer your customers more than one option to send payment to you. Technology allows you to accept debit cards, credit cards and gift cars. Utilize these options that are available to you.

Business Credit Cards

When you use your business credit card for expenses, you don’t have to mingle your personal and business expenses, which is a good way to keep your personal credit free of added liabilities. You also get a chance to build your business credit and are afforded more tax deductions during tax time. If you have employees, you may also want to issue business credit cards to them, but be sure these individuals are part of top management and you still have to monitor their spending. However, it frees up your time to have to leave the office to purchase supplies for the business.

Remote Deposit

How can remote deposit be of any help to the small business owner? Well, glad you asked! With remote deposit, you don’t have to make continuous trips for company deposits. Even when this is an employee’s responsibility, it saves time and resources to use remote deposit. Advanced technology has afforded the opportunity to deposit your checks from the office. All you have to do is to scan the check and it will deposit right into your business account. It doesn’t even matter what time of the day it is. This will make funds available faster.

The Bottom Line

With these effective financial solutions, you can grow your business, saving time and staying abreast of the company financial state. It is best to have an accountancy firm like http://fdanalytical.com  so that anything that you miss; it can be caught in time – prior to filing your business taxes.

 

Posted in Business Finance