Funding may be required at any stage of business development - both at the stages of its creation, and at the stages of the emergence of new projects, changes in its concept. The two most common and frequently used methods of raising finance can be working with a bank (loan) or with an investor.
Instructions
Step 1
To choose the right way to attract funding, analyze the current state of your business. Answer the following questions:
1. how much money will be required for your needs (for creating a business, rebranding it, expanding, etc.);
2. what funds do you have for this;
3. after what time will you be able to return the funds invested in your business;
4. what are the real opportunities to attract financing now (for example, a bank account has been opened).
Depending on the answers to these questions, choose the method that suits you best at the moment.
Step 2
If you stopped at taking a loan from a bank, approach the choice of a bank as carefully as possible. Do not trust too aggressive advertising of this or that bank. Take some time and talk with the specialists of the largest and most reliable banks. Find out everything you need with specialists, and not through the information posted on the sites.
Step 3
To obtain a loan, submit the documents of your business and its founders to the bank. The package of documents, as a rule, always includes financial statements (of course, if the business is already in progress), constituent documents of a legal entity, decisions made by its founders over the last year, and a business plan. The highest requirements for documents are set by foreign banks, but they are more reliable, and their interest rates on loans are usually lower. Upon reaching agreement, complete a loan agreement with the bank.
Step 4
Finding an investor is also a common way to attract funding. Start by identifying the investor groups that your business might be interested in. The more developed the business, the more such groups. If you are a new entrepreneur, rely mainly on acquaintances or business incubators.
Step 5
After you have selected several potential investors, write a letter to each of them describing your project and specific proposals regarding participation in it. Send out these letters and make sure the recipients receive them.
Step 6
Surely at least one potential investor will respond to your letter and invite you to meet for negotiations. Prepare a presentation about your business for this meeting. It should be short, but informative, it is important to tell not only about the product or service, but also about your team, since a lot for an investor depends on the team working on the project.
Step 7
If the negotiations were successful, complete all your agreements in writing with the help of an investment memorandum. This is a document that includes information about the terms of financing, your obligations to the investor and his obligations to you.
