finance articles businesses business management business marketing Technologies finance accounting Industrial Manufacturing starting a small business Investment health information

Using investors to fund your business


Raising capital to fund your business can be very overwhelming. If you can develop a few important business plans and can show positive net return to your potential investors, they may be very interested in funding your business.

First, you probably need to come up with a business plan, which sometimes is called a business proposal. You must present a short but detailed business plan including information about your education credentials, experience and training in the area of business that you are considering. You need to use convincing arguments to gain the investor's trust in you and in your ability to make your business prosper which will also benefit your investors. Use all the positive references and qualities that you posses along with your impeccable personal credit history to reinforce the decision making of your investor to trust in your business idea. If you have records of an excellent payment history, this could be very helpful in establishing a perception of strong stability with regard to your financial obligations.


Have an idea of how you anticipate to compensate your investors. The only purpose someone is going to loan you the money is if he can see an adequate return in exchange for investing in your business. Before you start your search for investors, it's probably wise to hire an attorney or an accountant to take a look at your idea and make specific suggestions on what you may have overlooked.

Once your plans and paperwork are approved, it's then time to look for investors. You can consider bringing in relatives, friends and colleagues to help fund your business. You might also consider other sources of financing such as venture capitalists. They are professional investors willing to take risks on new business opportunities. These investors include individuals with phenomenal net worth, financial institutions and corporations. Their rates are generally pretty extreme because of their readiness to assume risky investments. You can actually find these types of investors in the classifieds of your local newspaper. If you choose to go this way, make sure the investors have a clear understanding of how much they can expect to receive for the amount of their contribution. Most investors don't necessarily anticipate making a quick return on their investment during the first period of your business, but they certainly expect you to make profits in three to seven years in the future.

There are two types of investors, passive or active. Passive investors are the types of individuals who are willing to lend you the money but will play only a small part of sometimes none in running the business. On the other hand, active investors demand to be deep involved in your business operations. Before you make the decision to enter into any agreement with any investor, make sure you seriously understand that this individual will own a portion of your business and that you need to be somewhat compatible and able to work with him.

Finding the right investors to fund your business is not cheap. It has a heavy price to pay. Remember that your investors are part owner and are entitled to a portion of your business profits for a lifetime. Small businesses that struggle to qualify for a traditional business loan at the bank frequently find investors a great way to help them fund and launch their business.

FREE: Get More Leads!
How To Get More LeadsSubscribe to our free newsletter and get our "How To Get More Leads" course free via email. Just enter your first name and email address below to subscribe.
First Name *
Email *


Get More Business Info
Sponsored Links
Recent Articles

Categories

Copyright 2003-2020 by BusinessKnowledgeSource.com - All Rights Reserved
Privacy Policy, Terms of Use