Contrary to popular belief, business plans do not generate commercial financing. It is true that there are many financing options that require a business plan, but no one invests in a business plan.
Investors need a business plan as a document to convey ideas and information, but they invest in companies, products and people.
Small business financing myth:
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Venture capital is a growth opportunity for corporate finance. In fact, venture capital financing is very rare. I will explain later, but assume that only a handful of high-growth programs and high-power management teams are risky opportunities.
Bank loans are the most likely option for funding new businesses. In fact, banks do not provide funding for start-ups. I will also have more content in the future. Banks should not invest depositors' money in new businesses.
The business plan sells investors. In fact, they don't write well, persuasive business plans [and investments] can sell your business ideas to investors, but you also let those investors believe that you are worth investing. In terms of investment, it is the same as whether you are a suitable candidate, because it is about the feasibility of your business philosophy.
I am not saying that you should not have a business plan. you should. Your business plan is an integral part of the funding challenge, and it can accurately explain how much money you need, where it will go, and how long it will take you to get funding. Everyone who talks to you wants to see your business plan.
However, depending on the type of business you have and your market opportunities, you should customize the funds search and method. Don't waste your time looking for the wrong way to finance.
Where to look for money
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The process of finding funds must meet the needs of the company. Where to find funds and how to find funds depends on your company and the funds you need. For example, there is a huge difference between a high-growth Internet-related company seeking a second round of venture capital and a local retail store seeking a second location for financing.
In the following sections of this article, I will discuss more specifically the different types of investments and loans available to help you get funding.
Venture capital
Venture capital business is often misunderstood. Many start-ups are reluctant to invest in venture capital firms because they do not invest in new venture capital or venture capital. Venture capitalists are called sharks - because they are considered predatory business practices, or sheep - because they think they want the same trades like a flock.
This is not the case. The venture capital business is such a business. The people we call venture capitalists are businessmen who are responsible for investing in other people's money. They have a responsibility to minimize the risk. They should not take a greater risk than an absolutely necessary risk to generate the risk/yield required by the source of funds.
Venture capital should not be seen as a source of funding other than a few special startups. Venture capital cannot invest in startups unless there is a rare combination of product opportunities, market opportunities and mature management. Venture capital investments must have a reasonable opportunity to increase business value tenfold in three years. It needs to focus on newer products and markets that can reasonably predict sales growth multiples in a short period of time. It needs to work with mature managers who have successfully started businesses in the past.
If you are a potential venture capital, you may already know. Your management team members have been completed. You can convince yourself and a room full of wisdom that your company can grow ten times in three years.
If you have to ask if your new company is likely to be a venture capital opportunity, it may not be. People in emerging industries, multimedia communications, biotechnology or remote high-tech products often understand venture capital and venture capital opportunities.
If you are looking for the name and address of a venture capitalist, start with the internet.
The name and address of the venture capitalist can also be found in several annual catalogs:
The Western Venture Capitalists Association publishes an annual catalogue. The organization includes most California venture capitalists in Menlo Park, Calif., which is a percentage of the country's venture capital firms.
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Pratt's Guide to Venture Capital Sources is an annual catalog that is available online or in print format.
2. Types of venture capital: angels and others
Venture capital is not the only source of investment for start-ups or small businesses. Many companies are funded by smaller investors, the so-called "private placements". For example, in some areas, some potential investors occasionally meet with a meeting to hear a proposal. There are also wealthy people who occasionally invest in new companies. In the legend of startups, the investor community is often referred to as "doctors and dentists" and individual investors are often referred to as "angels". Many entrepreneurs turn to friends and family for investment.
Orignal From: How to fund your business in 2018
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