Think of Funding When Writing Business Plans

Posted by admin in Business Plans on 04/18/2016

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Think of Funding When Writing Business Plans

One of the mistakes made during the writing of business plans is treating business funding as if it is a completely separate section with no real relevance to the rest of the plan. In other words, you write your executive summary, business description, market strategies and analyze the competition in a funding vacuum. Then the financial section gets tacked on, and it basically states you need money and here’s how much money you need.

But investors read business plans closely, and they are looking for a particular type of company that fits their requirements.  The words you choose to describe your business and the presentation counts. For example, if you are looking for a business loans from traditional lenders, they are not going to be impressed with hype in the least. You may have the most “stunning” invention ever created that will change the way mankind lives once your product hits the market, but a bank is going to see that kind of claim as marketing hype.

Professional From Beginning to End

Business plans are unique products. They must be interesting, professional and well written while being interesting, entertaining and exciting. That’s not easy to accomplish which is why so many entrepreneurs decide to get professional help writing their plans. Yet one of the most important features that a business plan should have, yet is often overlooked, is funder appeal.

In other words, the funders you plan on appealing to need to be attracted to what you say in your business plan from the beginning all the way to the financing plan.  It’s easy to get carried away while writing because you’re excited about your business and finding startup funding. This can lead to the use of a lot of superlatives that make your business plan look like a lot of hype without substance.

Polish the Product

As a entrepreneur you are not a huckster, so the business plan should not make you look like the equivalent of a snake oil salesman. The business plan that makes a lot of wild promises is not going to attract equity partners. Unsubstantiated claims will not get you approval for business loans. Statements that portray you as a gambler will turn angel investors away.

Business plans should be polished products that are consistently honest and give the right impression throughout the entire document. You can’t write a plan that is sassy and reckless and then expect venture capital funding to be approved because you decide to get serious in the section on financing.

Payment and Plan in Full

Polishing business plans also means making sure the plan is complete. You are in a hurry to get your plan done and to find financing, but a condensed plan won’t get you anything except rejected and especially when looking for startup funding.  Business plans prepared for venture capital firms or equity partners need to contain all of the important information about your business.  The same thing is true for angel investors. If your plan is missing essential information including marketing plan details or financial projections or only summarizes an operational plan, then the assumption will be you have not bothered to work through these details.

The original business plans that entrepreneurs use to find business funding need to be comprehensive plans that are consistent and always keep potential investors in mind. It never pays to skip the details.

More detailed information and useful advice can be found at http://www.funded.com. , it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions.  If you need to access a vast network of business people, entrepreneurs, partners and service providers to help you start, finance and run your business, check out http://www.funded.com.

Angel Investors Offer More Than Money

Posted by admin in angel investors, Business Startups on 03/15/2016

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Angel Investors Offer More Than Money

Angel investors are known for investing billions of dollars investing in start-ups and have funded tens of thousands of small businesses. So it’s reasonable that entrepreneurs developing business plans will associate angel investors with money first. Yet angel investors have a lot more to offer business than just financing. They also have entrepreneurial skills, market knowledge and business savvy, which are all assets that new businesses can and should use to their benefit.

Angels spent considerable amount of time in a process called due diligence. They use their knowledge and business analysis skills evaluating business plans with two goals in mind: earn a designated return of investment and limit risk of loss. Investors consult with a number of professionals and get expert advice from a network of attorneys, accountants, business analysts and investor associates. For every entrepreneur initial rejection of funding by potential investor can also be an opportunity. Opportunity to learn from the reason of rejection, the business plan can be perfected for future requests using the information gleaned from the review process.

If the business plan is accepted, many angel investors offer time and advice as well as money. It’s not a case of interfering in the business or its management but rather a case of providing insight based on management and business experience. Most business owners welcome this insight as having enormous value. Angel investors giving feedback, mentoring entrepreneurs and promoting business growth are giving entrepreneurs assets that are at least as valuable as money for business growth. For some businesses, they are more valuable.

More detailed information and useful advice can be found at http://www.funded.com, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.http://www.funded.com

Typical Angel Investor? Is there such thing?

Posted by admin in angel investors on 09/03/2015

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Typical Angel Investor

Have you wondered where angel investor come from and what type of people to deal with and present your plan to?  Is  it a Donald Trump type of person – flashy and quite wealthy? Or is it someone more like your neighbour down the street who is quietly amassed a small fortune yet live prudently? The truth is angel investor could be either a person or a group of people.

The stereotype of an angel investor is someone who is a hardened business entrepreneur who has amassed great wealth but is always ready to earn more. Picture someone who is swoops in, evaluates the business plan, does some inquiries and then funds a start up with the expectation of high returns. In reality,  the angel investor may not be  as wealthy as you think but they are financially savvy. Most are still employed but they are looking for a way to grow their money by promoting innovative new business.

Angel investors fill a gap that exists between the venture capitalist and the commercial lender. Venture capitalists and financial institutions lend larger amounts with the former willing to accept high risk and the latter expecting minimized risk. Many angel investors invest smaller amounts of money, $20,000 instead of $200,000, but there are no limits so $500,000 up to $2 million is possible. They don’t want to play an active role in the business, but do have business savvy. Mostly they just want to make money.

Angel investors are also groups of people who pool their money to fund startup businesses. They include investment clubs, professional groups like doctors or lawyers and even other entrepreneurs. The reason there is a bit of mystery surrounding angel investors is simply because they keep a low profile, so are difficult to categorize. What you do know is that they are financially savvy, thorough in their evaluation of businesses and hopeful of earning a high return on their investments. So don’t stereotype angel investors because they can be anyone.

More detailed information and useful advice can be found at http://www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.http://www.funded.com

The power of ‘value proposition’ over angel investors

Posted by admin in Business Plans on 03/17/2015

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value proposition

All entrepreneurs know that angel investors rely on business plans in coming up with a decision to whether or not approve a funding request. Unfortunately, while this knowledge is already known to many, a lot of business owners still have a hard time crafting an exceptional plan.

The problem is with the content. More often than not, entrepreneurs only focus on what they believe are the most important aspects of the business plan: the company’s history, its marketing strategies, and its financial reports and outlook. While these are all necessary in convincing the investor that his or her money will be on the right hands, it lacks an important element that could mean the difference between a yes and a no – the value proposition.

The value proposition is an element in the business plan that defines why the consumers would avail of the product or the service. It provides the “benefits” that the purchase of goods or services would provide for the consumers.

This is something that an angel investor would want, as it would differentiate the business from its competitors. Moreover, it would provide potential investors with an idea on how the business fares when it comes to the alignment of its operations with the market.

Having a carefully crafted value proposition could attract more investors to provide funding for the company. For instance, a consulting firm would not be able get the nod of an investor if its value proposition is limited to statements such as, “it could help customers get a high return on investment.”

A better proposition would be, “customers will be able to experience an improvement of return of investment by using the company’s state-of-the-art and up-to-date propriety software and equipment.”

By tweaking the value proposition to provide a clearer picture of the business’ understanding of its target market, entrepreneurs would be able to convince angel investors that it is ready to accept financial support for possible expansion.

At the end of the day, the business plan remains the most important weapon that business owners can use to convince angel investors to pour money into their businesses. Having a carefully crafted value proposition within the plan would ensure that the business has a good chance of getting that evasive nod from an angel investor.

More detailed information and useful advice can be found at http://www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.http://www.funded.com

Business Plan Starts with a Mission to Succeed

Posted by admin in Business Plans on 12/15/2014

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Business Plan

Business plans are intended to be flexible plans for succeeding, not just surviving, as a company. Yet, according to a famous Harvard professor John Kotter, 70 percent of business initiatives intended to bring organizational change will fail. That is a remarkable figure because it means efforts to adapt to a changing marketplace is failing. There is a barrier between the business plan founded on a mission and the real world.

The setbacks are sometimes one of losing sight of the company mission and weakening to plan. The purpose of the mission statement clearly states what your organization seeks to accomplish: It has a philosophy underlying it that does not change. The mission statement is a reflection of the nature of products or services sold, potential for growth, pricing strategy, customer service, and role in the community, competition and others.

The business plan needs to be developed so that each and every segment drives the business towards fulfilment of the mission. A change of proposal is merely a strategy for keeping the business on track to fulfil the mission. Leading change requires first turning to the mission statement and the business plan. A business that needs to change must be able to write a sense of urgency all through the organization because staying true to the mission statement is needed to succeed. If a change idea is needed, it means the business has gotten off course from its mission and its vision.

The business plan goals and strategies may need to be revised, but that should always be a step in the change process. In fact, business plans can serve as the direction for change as each section, from the Executive Summary to the Financial Statements, are reviewed in light of the need for change. Leadership will identify specific strategies for incorporating change and then communicate the revisions on an organization-wide basis. The change process must be empowering and encompassing, meaning employees at all levels should be embraced as change agents.

Business plans begin with a mission statement and then serve as a living breathing document. Leading organizational change is not always easy, but it can be impossible unless there is buy-in to the mission and the business plan. The strategies used to get that buy-in can vary, but staying on message cannot.

More detailed information and useful advice can be found at http://www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.http://www.funded.com

The secret of successful angel investors: Diligence

Posted by admin in angel investors on 11/18/2014

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The secret of successful angel investors: Diligence

Having a lot of money is not the only thing that is needed by someone who wants to be a successful angel investor. While this is definitely a plus, as it allows one to invest in a lot of startups with potential, there is also one other characteristic that all effective angel investors have in common – diligence.

Diligence is one of the traits that are often overlooked, especially those who are new in the field of entrepreneurship. Most people are focused on looking for money as fast as they could. However, as business owners and investors start to gain more experience in their respective professions, they become aware of the importance of things that they used to they do not pay much attention when they are new to the field, such as the importance of diligence.

Diligence is defined as the person’s carefulness and persistence in his chosen career. It came from the Latin word diligere, which means “take delight in” or “to value highly.” Presently, the term is often used to describe the characteristic of working hard for one’s chosen profession.

Diligence plays a huge role in the success of the investor. As already stated, having a lot of money would not guarantee an angel investor’s success but diligence would.

This particular trait is most important for angel investors when selecting a particular business that they would like to invest in. According to experts, the most successful angel investors are those that take time in selecting the businesses that they would invest in.

Angel investors who are new to the business must keep in mind that money is not the only key to success. It should be coupled with the right amount of other traits that will help entrepreneurs in transforming their vision into realities.

The reality is that there is no real recipe that would enable someone to become more diligent in one night. It comes over time but experts advise angel investors not to rush into signing a deal without looking at all aspects of the business plan. This will soon develop into the fitting diligence that all successful angel investors have.

 

 

More detailed information and useful advice can be found at http://www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.http://www.funded.com

Funding Business Expansion through ‘Private Equity Financing’

Funding business expansion

Expansions are believed to be the best indicator that businesses are doing good. Unfortunately, while every entrepreneur seems to be of the opinion that bigger businesses are always better, the act of expanding a company is easier said than done.

It is easy to determine if a business is ready for expansion. In fact, there is only one major indicator: there is a bigger demand for the product or the service that the company offers. However, having a bigger demand does not necessarily mean that the business owner can easily whip out a plan on how he will expand his or her business – there is a bit of a problem called money.

A business owner would be lucky if he or she has some savings that can be tapped for a business expansion. This is not generally the case. And while there are a lot of options when it comes to financing a business expansion – angel investors, bank loans and support from venture capitalists – there is one option that has started to get attention of business owners over the years: public equity financing.

As the name implies, private equity financing means that an investor would be invited to put his or her money in a business in exchange for a partial ownership of the company.

This in itself would make a lot of entrepreneurs turn around and look for other ways to finance their business. A lot, of course, would not want to hand over the reins of the company that they built to another person in exchange of financing a business expansion.

But looking at it clearly, public equity financing is not as bad as it sounds. For one, agreements between the parties will still have to be forged – meaning one does not necessarily have to hand over the control of the business to the investor as the original owner have an option to retain the majority of the company, thereby putting him or her in direct control of the operations.

One has to keep in mind that investors, at least most of them, are merely concerned with the profits of their investments and would not want to be bothered by the rigors of administrating a business. Moreover, by being technically a part-owner of the company, the original owner will have an assurance that the investor is putting a great deal of interest in the business that also carries his or her name.

This is why public equity financing works both ways in expansions: investors get their bigger profits, while original owner gets to expand his or her business.

Looking for partners

The challenge in public equity financing, like in other forms of investor-related concerns, is for the business owner to find and convince one to be an equity partner in his company.

Finding will not really be a problem, as there are always those who have some extra funds that they intend to invest in a business eyeing expansion. The major concern is to be able to convince them.

In convincing potential equity partners, business owners must keep in mind that they have to convince the former that they will earn profits from their investments. This can be achieved by presenting relevant information as to the operations of the business.

This may include, among others: discussions on the competencies of the current management to handle the expansion, the risk exposure of the equity partners, the business plan and objectives, the financial history and performance of the business.

The entrepreneur should also be ready in negotiating with the terms of the deal, including, as stated earlier, the level of control – or the lack of it – that the equity partner would have once the agreement is in place.

Finally, entrepreneurs must be able to list down his or her reasons for the decision to expand and, more importantly, to utilize public equity financing as a means for the business expansion.

Like what had been repeatedly said, capital for business startups and expansions will never run out – one just has to know what he or she is looking for and, more importantly, where to look for it.

More detailed information and useful advice can be found at http://www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.http://www.funded.com

 

 

Copyright 2014 Funded.com LLC

Top 5 Most Profitable Industries

Posted by admin in business funding, Business Startups on 09/15/2014

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Top 5 Most Profitable Industries

The capability of entrepreneurs to effectively and efficiently manage their own businesses is among the requirements to succeed in this field. However, there are other factors that contribute to the actual results of a venture.

One of these, apparently, is the general performance of the sector in which the entrepreneurs establish their businesses. According to a new report, healthcare and the real estate sectors remain the most profitable sectors, comprising almost half of the list.

Despite this, what topped the list is something that is not surprising as deals with money – accounting and other related services. These are some of the most profitable sectors are as follows:

Accounting and related services

There is no denying that proving accounting and related services, such as bookkeeping and payroll services, top the list of most profitable industries at the moment. According to latest reports, the sector has a net profit margin of 19.8 percent – primarily due to high demand and low equipment overhead and equipment costs.

Legal service

Next to accounting, which is also not a surprise, is legal services. With the rise of legal issues arising both between individuals and companies, there is nothing new with reports that among the sectors that reap a big margin is the field legal service. The only surprise, perhaps, is that it did not top the list this year contrary to the last.

Oil extraction; Machinery rental

Tied on the third place are sectors concerned with oil extraction and the leasing/rental of industrial and commercial machinery equipment.

The high ranking of these two is primarily on the current policy that focuses on increased production of crude oil and the rising number of constructions and industrial development in the country in recent years.

Dental services

The fifth on the list, dental services, is quite a surprise. Who would have thought that a specialized sector would be able to compete with, for instance, industries dealing with oil extraction? On another thought, however, the number of people requiring tooth extraction – not to mention other related dental services – will remain a demand so long as the humanity survives.

Real estate leasing; Brokers; Medical service

Tied on the sixth to eighth places are the real estate leasing, real estate brokerage, and the medical profession.

According to latest reports, the improvement of the economy has resulted in the better performance of the housing market, thus the good profit margin of real estate brokers. Moreover, however, this has also pushed the profits of those engaged in rental services, the prices of which have shot up in recent months.

Meanwhile, doctors, as expected, are in the list – primarily due to the increasing population, and partly due to the issues on health and lifestyle that is affecting the new generation.

Other health practitioners; Management companies

Tied for the ninth and tenth spots are other health practitioners and management companies.

Dentists and doctors are not the only ones reaping the increase in profit margin in the past months. Expected to join them are other health practitioners, who are very much needed just like the doctors and dentists in this part of the world.

With the growing trend of businesses outsourcing management strategies to experts, those who have management backgrounds have jumped at the bandwagon and established their own companies that provide the current demand – for a profit, of course.

These ten industries are just some of the most profitable sectors that those who consider establishing businesses – or even just applying for a job – should think about. Runner-up include outpatient care services, schools, real-estate related activities, death care services, and mining support.

 

More detailed information and useful advice can be found at http://www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.http://www.funded.com
Copyright 2014 Funded.com LLC

Basic Principle of Financing

Basic Principle of Financing

Poor management is often referred to as the main factor of why businesses fail. Lacking or poorly timed financing is a nearby second. Whether you are a starting up business or expanding your business, adequate capital is important. Yet it is insufficient to essentially have enough financing; understanding and planning are necessary to control it well. These qualities will ensure business owners to avoid mistake like having a wrong type of financing, or underestimating the cost of borrowing money.

Ask yourself this question before inquiring about financing:

  • Do you need more capital or can you work on with your existing cash flow?
  • How do you characterize your need?  Do you need the money because you want to expand? Or as a cushion against risk?
  • How vital is your need? You can get the best terms when you foresee your needs rather than looking for money under pressure.
  • How big is your risk? All businesses suffer from risks and danger, and the level of danger will influence expense and accessible financing plan B.
  • How strong is your management team? Management is the most important element surveyed by money sources.

Possibly most importantly, how does your need for financing mesh with your business plan? If you don't have a business plan, make writing one your first priority. All capital sources will want to see your plan for the start-up and growth of your business.

Don’t assume all money is similar

There are two types of financing: equity and debt financing. If you are looking for money you should consider your business debt to equity ratio – the difference relatively concerning dollars you've borrowed along with dollars you've invested in your organization. The harder money masters include invested in the organization, the more it really is for you to entice loan.

If your company has an excessive percentage of equity to debt, you may want to seek debt financing but if your company has a high percentage of debt to equity, experts say you should increase your ownership capital for added funds. In this way you will not be over-leverage to the point of ruining your company’s welfare.

Equity Financing and Venture Capital

Most small scale businesses use limited equity financing but with debt financing, additional equity mostly come from non-professional investors like friends, relatives, employees or customers. However, the most common source of professional equity funding comes from venture capitals. These are institutional risk takers and may be groups of wealthy individuals, government-assisted sources, or major financial institutions. Most specialize in one or a few closely related industries.

Venture capitals are sometimes seen as deep-pocketed financial gurus looking for start-ups in which to invest their money, but they most often prefer three-to-five-year old companies with the potential to become major regional or national concerns and return higher-than-average profits to their shareholders. Venture Capitals earn money by owning equity in the companies it invests in. They generally prefer to influence a business passively, but will react when a business does not perform as expected and may insist on changes in management or strategy. Changing some of the decision-making and some of the potential for profits are the main disadvantages of equity financing.

Debt Financing

Banks, savings and loans, commercial finance companies, and the SBA are some of the sources for debt financing. State and the local government have come up with programs in the recent years to give encouragement to the growth of small business to help increase the economy. Family members, friends, and former associates are all potential sources, especially when capital requirements are smaller.

Banks traditionally have been the major source of small business funding. Their main role has been as a short-term lender offering demand loans, seasonal lines of credit, or single-purpose loans. Banks generally have been unwilling to offer long-term loans to small firms. The SBA guaranteed lending program encourages banks and non-bank lenders to make long-term loans to small firms by decreasing their risk and leveraging the funds they have available. The SBA's programs have been an integral part of the success stories of thousands of firms nationally.

In addition to equity considerations, investors or lenders mostly require the borrower's personal guarantees in case of default. This will assure that the borrower has a sufficient personal interest at stake to give attention to the business. For most borrowers this is a burden, but also an obligation.

 

 
More detailed information and useful advice can be found at http://www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.http://www.funded.com

 
Copyright 2014 Funded.com LLC

Writing a Sure-Win Business Plan

Posted by admin in Business Plans on 07/09/2014

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Writing a Sure-Win Business Plan1

Entrepreneurs often look into their business plans as the heart of the startup. This is, according to most of them, the most important document that would ensure that the business is running towards achieving its ultimate objective.

Some business owners, however, fail to see beyond this point. The reality is that business plans are not just important in the day-to-day operations of the company. It is also important in terms of securing the most important element of a business – the funding.

A lot of entrepreneurs think that business plans do not contribute to the decision of a potential investor in funding the business. Some think that investors rely only on the pitch documents that were given to them.

Unfortunately, this is far from the reality. Most investors rely on the business plans when deciding whether or not they should fund the business. The reason is that they would not want to base their decision on documents that they know were tailor-made to impress them. These are intelligent people, and they often look for signs that the person whom they intend to partner with are also intelligent enough to make the business profitable.

This is where the need for a sure-win business plan comes into place. Instead of just writing a bland plan on how the business is expected to operate, the document should also include portions that would pique the interest of a potential investor. These include ideas on how the company will implement crucial projects, as well as handle potential problems that it would face in the future.

The bottom line is this: The business plan should not show the weakness of the company. This does not mean that the document should avoid mention of negative aspects. It should. But instead of leaving it like that, the document should also feature a “plan” on how the management would and should address it.

Instead of featuring the pessimism of the owner, the business plan should showcase the ability of the people behind the business that they are capable of handling every single problem that the start-up may face in the future.

This approach to writing a competitive business plan is an effective way of luring potential investors. It shows potential, and highlights the capability of the owners in thinking through with their plans.

Business plans are not just internal documents that are written for the sake of the employees and the main players of the company. Rather, it is a document that provides an overview of the business to external groups, most importantly the potential investors.

 
More detailed information and useful advice can be found at http://www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.http://www.funded.com

 

Copyright 2014 Funded.com LLC