When you approach people or an organization for money, you will have a much better chance of getting your capital if you have a well-written business plan. This conveys to the other party that you are serious and committed to your proposal.
Be prepared to face rejection and be prepared to try again and again till you do secure your capital. If the county is in a bad financial state when you are trying to start a company, it shall be much harder to secure the capital required. But currently, India is booming!!
When approaching banks, be prepared to face the following questions:
- How will the money be used?
- How will the money be repaid?
- What sort of collateral will back the loan?
- Are you trustworthy?
- Do you have experience and background necessary for your type of business?
- Do your management staff and key employees have required experience and background?
- What are the long-term prospects of your business?
Venture Capitalists
When approaching venture capitalists with your business plan keep the following in mind:
A typical venture capitalist (VC) will receive thirty or more business proposals a day, only 10 percent of which he will read. Of those read, only a few will be investigated further, and even fewer will be funded. Therefore….
Make sure your business plan is professional looking, clearly and concisely written. Some VC’s believe that the initial proposal should not exceed more than 12 pages in length. In general 40 pages should be the absolute maximum. The facing page should outline the elements of a venture proposal.
Stress your capabilities and those of the management team. VC’s often base their decisions on the fact that they are investing in you instead of your business.
Knowing the VC before he/she receives the proposal is a definite must! Try to get an introduction through a lawyer, accountant or other contact.
Have a stock liquidation plan prepared so the VC will know how to exit from your business. Most VC’s want to invest in ventures with high growth potential (say, 30 percent annually) and then be able to “get out” before the business matures.
Please Note: This guide just gives you the basics of starting a company. There is much more to learn! This guide was designed as an introduction and let you know about all the aspects that are involved. Here is a good site to learn more about the aspects of business management The Free Management Library
Each of the pages like, marketing, inventory, setting business objectives etc. are all a science of their own. There are in-depth books written on all of these subjects. We hope that though this guide we have been successful in giving you at least a brief introduction to what goes into starting up and running a company.
Best of Luck! We hope you are successful!