How to Get Your Finances Ready to Present to Investors
For every entrepreneur who successfully kicks off a business, there are many, many others who don’t have the same luck. Some people, unfortunately, fail to launch their dream, while others never even attempt it. One of the biggest barriers to starting a small business is lack of financial resources. This is where financing from investors comes into play. When you find interested investors who believe in your vision and who have confidence your business has a bright future, you stand a good chance of getting your plans off the ground. Before someone will loan you the money you need, however, you need to get your finances in order and show them to the lenders.
Project How Much You’ll Make
Investors want to feel good about your company’s potential to generate high amounts of revenue in the near future and long term. With careful research and forecasting, you can provide these projections to the lenders. The lender knows you don’t have a time machine to visit the future, but you can reasonably look at a short-term timeline such as three, four or five years and provide an educated guess where your company will stand financially and much revenue you’ll bring in. If you can demonstrate a legitimate reason to believe your business will be lucrative, the lender will feel good about financing your dreams.
How Much Will You Spend Now and Going Forward?
In order to make money, you need to spend money. The trick is, as your business grows and changes over the years, you’ll have to pump in more capital to keep up with demands. It’s important for investors to know how much you’ll need to spend from the outset, how much you’ll spend going forward and how you’ll address these changes and challenges. Make sure you evaluate costs for hiringemployees; building, buying or renting office space; purchasing equipment and supplies; and paying for sales and marketing efforts.
What Will Cash Flow Look Like
You may very well generate healthy revenue, but if your costs will be high and will only increase over time, cash flow could be a problem. Poor or no cash flow can sink any business, and investors don’t want to risk putting money into an organization with no cash flow. Show the investor how you’ll plan to maintain available cash through years of plenty and lean.
When you can provide investors with this information, you can feel good about your chances to secure financing. Start working on these plans today so you can launch your business dreams tomorrow.