For every entrepreneur starting a business is no mean task! The prospect of providing a new service or product to the world, designing one’s future and setting up a legacy are the reasons why most people decide to become an entrepreneur.
However, once you address the lofty aspects, there are several mundane aspects to manage as well. One of the potent concerns is getting the required funding to promote the business. Mark Elenowitz shares a few useful ways for entrepreneurs to finance a business.
1. Have a business plan
The business plan is a map for the next three to five years for an organization. It is made of many elements, and a living document will grow and change according to its abilities and needs. The initial step to set up a business plan is to have a thoughtful executive summary that comprises your business plan’s totality. It should also reference the company profile and goal. The company description needs to offer the business’s salient details and ways it is different from other market players. It should also highlight the primary markets that it will target. You need to complete market analysis at the start of a new venture. It will generate the industry’s clear image and outlook, data about the target market, and the potential market share.
2. Funding request
If a part of the objective of having a compact business plan extends to putting forward a funding request from potential investors, it will be a part of the business plan. And within it, entrepreneurs should add the funding the business requires along with the projected amounts in the next five years. You need to explain how you will implement the budget. You should also mention the preferred funding type and the associated terms. It is essential to outline any necessary future financial plans. It comprises selling the business, buyout plans, debt repayment, or making sure that the venture is acquired. All these are essential considerations for funding your business’s future.
3. Financial projections
Adding a financial projection section in the business plan enables the stakeholders to get a clear picture of where the business wants to head in the forthcoming years. Entrepreneurs might get tempted to place hopes and goals here, but it requires data. The section can get completed after completing a market analysis and outlining clear and realistic objectives. It enables businesses to allocate resources effectively.
Historical financial data is an essential aspect of generating solid financial projections. The creditors will want the data for the past three to five years for successful ventures, and a new business entrepreneur will not have this data. Hence, any available financial history must be added, such as income statements, cash flow statements, and balance sheets.
4. Business loans
There are many ways to get a business loan. The SBA (Small Business Administration) provides comprehensive loan programs designed to cater to multiple requirements. The other way out is to approach the private lending entities or banks. It is essential to take time to explore the choices available before deciding on an option.
These are some of how entrepreneurs can finance their business and go ahead with their plans.