Another choice is to look at private equity for financing. There is an interesting book about the subject called Money Magnet – How to Attract Investors to Your Business by J.B. Loewen, John Wiley & Sons, Toronto, 2008. The book was written because the author noticed some business grow not necessarily they are better than others, but some grow because they know how to access money or capital.

In most things in life, it is important to understand the stages of the process before sending business plans to every private equity company. Somebody may take ask for an interview, but chances are better if you target investors who fit your business first. As the owner, you must understand what type of business you have and the size of it. Where is the company on the business curve? How much money, besides more, do you wish to raise. The Types of financing are seed, start-up, angel, venture capital, growth capital, mezzanine/debt financing, traditional banking and bridge financing. Each of these types of investors is distinctive in their risk tolerance and expectations of you. The corresponding types of businesses are early operating company, high-growth, first-stage financing, if you wish to consolidate, if you are established with revenues, if you want the public market. Remember those with revenues and companies that can be seen to be enlarged or scaled up are the best candidates for money.

You have a meeting and your business plan follows the guidelines and match the purpose – the name of the company describing your business – other side thinks does it? the team – do they have the skills necessary? the need – is there enough of burning need for your solution? your proposal – can you fill the need? is there a WOW factor? the product – what is your sales? what are the alternatives? the revenue model – are the cash flow projections fair? the market – can this business scale up? competition – why are you better than the rest? barriers or risks – what is your competitive advantage? go-to-market strategy – how quickly can you reach the market? milestones matched – do you do what you say you are going to do? target milestones – what will you do with the money and expected targets you will meet? financial data – it is investable business with ability to generate above average returns? investment highlights – what 3 points do you want investors to remember?   All the above starts with a meeting and the investors are assessing your grasp of the business, your confidence in running it and you. The purpose  of the first meeting is start the conversation for the average time to gain hold of the money is 3 to 4 months.

Linking to dividend paying stocks, the starting point of your analysis is easier because you are looking at profitable companies which pay a dividend. You will want to go through similar questions and remember when venture capital companies make a decision it takes 3 months. While you are likely not buying greater than 5% of the company, you need to take your time. If you analysis indicates the company should continue to pay a dividend, the stocks will go up and down or fluctuate so waiting can be a good thing based on your outlook for the markets.

There are more questions than answers, till the next time – to raising questions