To make your idea a reality in the marketplace, finance is essential.There are various ways in which you can get finance.
Find out here where to start the process, what goes into a feasibility study, how to prepare your presentation when requesting finance and key contacts in the finance sector.

1. FINANCING YOUR BUSINESS
2. GETTING FINANCE

Most start ups need finance to bring their new idea to the marketplace. A financial feasibility study has to be done before you commit resources to the business idea.

A financial feasibility study will help you to determine -

• whether the business will show a profit
• how much money you will need to invest in the business
• how much money you will need to borrow
• what the operating or running costs will be
• how much you must sell to cover your costs
• what the cash flow will be
• whether the expected profit is worth your while given the risks involved

The two main cost you need to consider are:

1. Establishment/Start-up costs

• Legal costs (e.g. contracts)
• Machinery and equipment
• Stock
• Market research
• Provision for operating costs for at least six months (e.g. salaries, advertising, rental, etc.)

2. Budgeted operating/running costs

• Salaries and wages
• Rental of premises, equipment
• Municipal services, e.g. water, electricity
• Insurance
• Advertising
• Telephone, stationery, postage, etc.

Simple Presentation

In raising money for a small business, you need to make a quick, simple presentation to a lender. You need to show:

• why the business is sound or why your idea will work
• how much money you need
• when the money will be paid back
• what security can you offer

Providing Numbers

If your business is up and running, bring your latest annual and/or monthly income statement sheets. If your business is a sole proprietorship or a partnership, you may have to personally guarantee any loan. In this case, bring a statement showing your personal net worth (assets less liabilities). Also, you should provide a cash flow projection indicating when borrowings will be repaid.

Playing the Part

The financier's opinion of your capability and trustworthiness will be a major factor in the bank's (or any lending institution's) loan decision. Appear relaxed and confident about your business prospects. If you are seeking funding for a relatively new business, include a résumé (list of your previous accomplishments) in your presentation package.

Customising your Presentation

Appeal to the needs of the person you are approaching for money. If you are seeking loan finance, emphasise the certainty of your ability to repay the loan – don't emphasise prospects of sky-high profits. Remember, debt financiers do not share in profits. Big talk about profits will make a debt financier view you only as a risk taker or unrealistic dreamer. On the other hand, if you are making presentations to equity (share) investors, you certainly want to emphasise your profit potential. Here again, refer to persons and organisations who have expertise in the field of business financing.

Other useful information:

• Bank requirements for SMME's developed by Creamer Media's Engineering News.
• List of finance service providers