Updated: 17 May 2015 05:51. By, Melkisedeck Shine.
👉[DON'T MISS] What is a math teacher’s favorite type of dessert?
Debt financing
This is money loaned to the business from outside source that is paid back over time.
Key considerations in debt financing include:
- Retaining more control over your business.
- Payments strain on the cash flow.
- Imposition of restraints and conditions for repayment of the loan.
Types of debt financing are:
- Operating (A/R and Inventory)
- Short term (current assets)
- Long term (fixed assets)
Timing of financing
Entrepreneur who approaches a financier must be thoroughly prepared. This involves completing the business plan. There are ten factors to consider when an entrepreneur is timing for finance. These include:
1. Be prepared when meeting with an investor or banker. Have a completed business plan, executive summary or prospectus, and financial statements with you.
Demonstrate your knowledge of the industry
Know the strengths and weakness of your plan
Understand your financial information
Be clear and concise about the opportunity
2. Make sure you have the ability to repay or retire the investment.
3. Emphasize Managerial Abilities and credentials; particularly with equity investors whose investment decisions are largely driven by their confidence in your ability to grow the company.
4. Invest some of your own capital to demonstrate your own commitment and belief in the business.
5. Develop a long term financing strategy.
6. Find financing to suit your business. Be prepared to walk away from a deal if you don’t like it. (Easy Finance and Teachers).
7. Seek strategic alliances or joint ventures with suppliers or clients to leverage your financial resources.
8. Use your contacts. Networking is the key to “getting the world out”.
Make a list of everyone you know.
Add a list of everyone they know.
You will be amazed at how you can came up with someone who knows, or knows someone who knows, a key investor you may be trying to get reach. This really works!
9. Re-examine the capital structure of your business regularly to ensure it is appropriate. Proportion of bank financing, private investment and owner’s equity may change depending on the circumstances.
10. Know your financing objectives. Do you want to control or do you want growth? Sometimes financing growth means giving up control.
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The primary sources of funds for small business start-ups are personal funds, friends and relatives, NGOs or private investors, banks, government agencies and programs, and venture capital… read more
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There are several legal forms to choose from when selecting the best means of structuring your business. Carefully considering the various options before start may save time and money later. There are several forms of business structures including:.. read more
Business Concept and Idea Development
In order to market your product or service, you will want to be very clear about what it is that your business actually does or has to offer. You should be able to quickly and accurately describe your business concept in just a few sentences… read more
Assessing the Viability of the business Idea
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