Financing a Small Business
Investors are usually savvy people, that’s how they got the money to
invest in the first place!! They only want to put their money somewhere
they are assured of a better return on it than in the Bank, or investing
it on the stock market.
It’s your job to persuade them you will make money for them. Do this by researching your market, and then producing a well thought out business plan.
I have dealt with this in detail in the very first module of this course, but I recommend you reread this carefully now. When we studied it at the beginning of the course, you may have been new to management theory. Now you will see this advice in a different light. Please read all the modules listed on this page.
Realistically a new business is not going to make a profit in the first year, or maybe even the second. So, you need to cover your running costs for that period, as well as the start-up costs. It is important to borrow enough, not only to meet the start-up costs, but also to cover the first year or two. It is equally important not to borrow too much, as you will have to service the debt. Ideally you want to arrange a first tranche of funding, with an option to go back for more at a later point.
This is why it is crucial to have an accurate business plan.
Actually, even if you don’t need to borrow money, doing your market research and writing a business plan is key to the planning and decision making process.
You have to check there is a market for your product. Define who needs what you are offering, and check that there is space for your product or service in the market, and that it is not saturated. Is the market international, or just local? Maybe it is a niche market. Can you define who your ideal customer is?
It’s your job to persuade them you will make money for them. Do this by researching your market, and then producing a well thought out business plan.
I have dealt with this in detail in the very first module of this course, but I recommend you reread this carefully now. When we studied it at the beginning of the course, you may have been new to management theory. Now you will see this advice in a different light. Please read all the modules listed on this page.
Realistically a new business is not going to make a profit in the first year, or maybe even the second. So, you need to cover your running costs for that period, as well as the start-up costs. It is important to borrow enough, not only to meet the start-up costs, but also to cover the first year or two. It is equally important not to borrow too much, as you will have to service the debt. Ideally you want to arrange a first tranche of funding, with an option to go back for more at a later point.
This is why it is crucial to have an accurate business plan.
Actually, even if you don’t need to borrow money, doing your market research and writing a business plan is key to the planning and decision making process.
You have to check there is a market for your product. Define who needs what you are offering, and check that there is space for your product or service in the market, and that it is not saturated. Is the market international, or just local? Maybe it is a niche market. Can you define who your ideal customer is?
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