I don't really get involved with the funding of businesses, even clients. But I do try to help clients think through their strategy for coming up with necessary funds.
Every source of funding wants to see the entrepreneur have some "skin in the game." That means that the entrepreneur is putting some of his/her own money at risk in the deal and therefore has more motivation to spend well and keep a close eye on things.
So, don't expect anyone to give you all of the money you need. You or your business have to put up a chunk.
Secondly, you have to show how the money is going to be paid back within a reasonable period of time. If you want to borrow $100,000, you realistically have to show that you can afford, out of cash flow, to pay back $20,000 per year plus interest; or to pay interest only, with a huge balloon at the end; or something in between. Will your cash flow support that?
Thirdly, you need collateral. To get that same $100,000, the lender will want to see collateral of at least that amount. That can come from fixed assets, inventory, real estate, accounts receivable or a personal guarantee. Lenders don't like risk. They want to be covered. They will take your assets if you cannot repay the loan.
Fourth, you need to convince the lender that you and your management team have the experience and the expertise to run the business well.
If you come up well on all fronts, straight bank financing is a real possibility. If you can't get bank financing, then you can look to private investment bankers or venture capital funds. Their rates will be higher (higher risk, higher rates) and they will probably want equity in your business as well. Some entrepreneurs find this hard to swallow. But owning a smaller piece of a bigger pie should be palatable, especially if it is the only way to get funding. They are still not the easiest people to convince. They get to look at lots of potential deals, so there is lots of competition for their money.
If you have not yet succeeded, you can look for high net worth individuals who are "angels" for small companies. There may be someone who knows your business area and is attracted to investing in companies such as yours without the same regard for the fundamentals as banks and VC funds may have.
Some entrepreneurs try to put together a "private placement", trying to sell shares in their business to a number of individuals to raise the desired funds. This effort is expensive and takes a long time, but may be fruitful.
If all else fails, it may pay to just put your nose to the grindstone and knock out a couple years of improved results and then go back and try it all again. You may need to take a hard look at your company, particularly at those areas that caused potential investors to turn up their noses, and do some cutting or put in some operating efficiencies.
You can use your search for funds as a learning experience. You are getting advice from objective professionals on what is wrong with your business. Take the advice, fix your business and go back to the lenders showing them what you learned.
Patience can be a virtue. In most cases, windows of opportunity will always be there.Listen to the experts and make your business better. The growth will come.
Every source of funding wants to see the entrepreneur have some "skin in the game." That means that the entrepreneur is putting some of his/her own money at risk in the deal and therefore has more motivation to spend well and keep a close eye on things.
So, don't expect anyone to give you all of the money you need. You or your business have to put up a chunk.
Secondly, you have to show how the money is going to be paid back within a reasonable period of time. If you want to borrow $100,000, you realistically have to show that you can afford, out of cash flow, to pay back $20,000 per year plus interest; or to pay interest only, with a huge balloon at the end; or something in between. Will your cash flow support that?
Thirdly, you need collateral. To get that same $100,000, the lender will want to see collateral of at least that amount. That can come from fixed assets, inventory, real estate, accounts receivable or a personal guarantee. Lenders don't like risk. They want to be covered. They will take your assets if you cannot repay the loan.
Fourth, you need to convince the lender that you and your management team have the experience and the expertise to run the business well.
If you come up well on all fronts, straight bank financing is a real possibility. If you can't get bank financing, then you can look to private investment bankers or venture capital funds. Their rates will be higher (higher risk, higher rates) and they will probably want equity in your business as well. Some entrepreneurs find this hard to swallow. But owning a smaller piece of a bigger pie should be palatable, especially if it is the only way to get funding. They are still not the easiest people to convince. They get to look at lots of potential deals, so there is lots of competition for their money.
If you have not yet succeeded, you can look for high net worth individuals who are "angels" for small companies. There may be someone who knows your business area and is attracted to investing in companies such as yours without the same regard for the fundamentals as banks and VC funds may have.
Some entrepreneurs try to put together a "private placement", trying to sell shares in their business to a number of individuals to raise the desired funds. This effort is expensive and takes a long time, but may be fruitful.
If all else fails, it may pay to just put your nose to the grindstone and knock out a couple years of improved results and then go back and try it all again. You may need to take a hard look at your company, particularly at those areas that caused potential investors to turn up their noses, and do some cutting or put in some operating efficiencies.
You can use your search for funds as a learning experience. You are getting advice from objective professionals on what is wrong with your business. Take the advice, fix your business and go back to the lenders showing them what you learned.
Patience can be a virtue. In most cases, windows of opportunity will always be there.Listen to the experts and make your business better. The growth will come.
Dear Investor:
I would like to request for capital investment funding of at least $25,000.00 for a travel agency to handle conventions or tours on large scale or volume sales.
We are a world class travel agent and would like to venture into selling customized package tours and special events to the Philippines. TEO is a stellar company that provide premium expertise and professional service. We thrive in the travel trade because of impeccable reputation, with high credibility, high dynamism, high income, high yield, and high profile. We are growing to become the global and multilingual travel consolidator to surpass the existing giants and old timers in the business.
We will focus on encouraging tourists to go to the Philippines. I have expertise in the travel trade 17 years-working for 14 years with the Philippine Department of Tourism and co owning a travel agency for 3 years.
I am proficient in 4 languages aside from mastery of the English language-French, Italian, Spanish, Japanese. I have experience in guiding diplomatic guests, dignitary state guests, and handling VIPs on the job at the Department of Tourism. I have traveled to most tourist attractions in the Philippines, all provinces in the Philippines-North to South.
I have expertise and wide experience in other fields as well, I am a published Writer for technical documents DOT Annual Reports 1988-1995 and published Consultant Writer for business magazine, Planning Officer, Documenter for USAID, Translator/Interpreter, PR coordinator for Miss Earth 2007 Pageant, Research Executive interviewing CEOs for global survey projects, etc. (ex President Jimmy Carter/PriceWaterhouse/Coopers/ACNielsen).
My credentials speak for my accomplishments.
Very respectfully yours,
Ms. Edess P. Amador
TEO Travel Executive Organizer
0063 917 375 4899
Posted by: Edess P. Amador | June 15, 2008 at 09:44 PM
i am an inventor can i get funding for my invention johnson3521@roadrunner.com
Posted by: vernell johnson | January 03, 2012 at 07:01 PM