10 steps for financing your startup company:
1.Evaluate your business plan, concept and organization
All lenders or banks evaluate the safety of their money before lending. They will only finance your business only when there is a realistic possibility. Banks and venture capitalist will always help in financing your business provided that you have the ability to exploit the market opportunity and that your company can protect itself from current and future competition.
To show that you have the ability to steer a business, review your business plan concept and organization, showing how you can counter known and unknown risks. Validate as many assumptions as possible and recognize competition from alternative approaches.
2.Evaluate and confirm legal issues
Review all legal aspects of your business before completing the business plan. Consult outside experts in areas such as the intellectual property underlying the business concept, patents and trademarks.
Connecting to other people who are either experienced or are in the same level of business will help you get knowledge of various issues. Signing up on LinkedIn and starting to interact with the world’s largest professional network will help you sharpen your investment ideas, help you in gaining confidence at start up as well as meeting new investors.
4.Build your budget
At start up, cash is required to support growing receivables, pay for labor as well as taking care of unknown circumstances. This calls for a strong foundation and plastic business cards can be of great help. Account for everything required in the initial stage of your company and start looking for finances with a clear figure of all the requirement .Include estimates for spending by all departments and plan to update your estimate on a monthly basis.
5.Set up an expense tracking system
Work with professional to assess and identify the best accounting system to record and track all your expenses. This will help you monitor your progress enabling you to make fundamental decisions at the initial stage of your company.
6.Build your team
Fill in the position you only need for the initial stage. Put more consideration on creativity and flexibility and outline termination provisions, confidentiality and terms of work to all the employees.
You can also rely on part time staff and consultants to fill in several management positions. Investors are in many cases concerned with the succession plan for top management. In this case define the continuing personal role that will enhance the company future prospects.
7.Identify the likely levels or types of financing your company will attract
Majority of the startups are initially funded by the entrepreneur or the founding team. The level of funding from these sources is rarely enough. Banks avoid financing start ups unless there is full collateral from the sponsor or entrepreneur.
If your startup can create and defend one or more large market segment, target major venture capitalists but if your concept does not address a large opportunity, consider seed funds or other small investors. In some cases, state or federal funding is very important for start ups.
8.Choose your financier
After identifying the level of finances that your company will attract, choose the financier. Present your well written business plan so as to convince them to sponsor your company. A well written plan will also help you convince them that their money is not put into waste.
Personal recommendation from experienced members of an entrepreneurship community counts a great deal.Other options include:crowd-sourcing,grants and product presale.
9.Follow your business plan
Investors will expect you to live up to your business plan. Nevertheless the plan should be continually adapted to the changing circumstances so that you can have realistic expectations of the future .Major changes should be considered and implemented with input from the investor too.
It is important to close the funding with one or more investors. Reward and protect your first investors for their prescience.Your next challenge is to use the funds wisely in the development of your company