August 14, 2007

Working on your business plan

You probably understand how important a business plan is. Obviously, investors are interested in looking at your business plan. However, that is not the only value. Your plan will often guide and direct your overall business goals and objectives.There are a few issues that are  important to include:

  • What problem are you trying to solve? Be specific.
  • How will your business solve that problem?
  • How will you generate revenue?
  • Who are your target customers?
  • Who are your competitors?

In addition, there are a few key sections you should include in your business plan:

  1. Introduction
  2. Business Description
  3. The Market Opportunity
  4. Development and Production
  5. Sales & Marketing Section
  6. Expenses and Capital Requirements
  7. Management Team
  8. Financials
  9. Appendices

Other financing sources that you should know about…

Most of our customers are attracted to our site because of the large network of angel investors that use our site. While angels are a great fit for some of you, I think that it would be smart to learn about some of the traditional (or non-traditional for that matter) forms of financing.

Here are a few examples to get you thinking:

  • Factoring/Accounts Receivable Loans: The balance of your accounts receivable serve as collateral for a business loan. For example, if you have an average of $100k in monthly receivables, the financing source will pay you approximately $95k at the beginning of the month and then collect the full $100k at the end of month. If you have receivables, start here!
  • Equipment Financing Loan: If you are looking to raise capital in order to purchase any type of equipment, it might be best to start of trying to secure an Equipment Financing Loan. We have a lot of lenders that are very aggressive when it comes to financing equipment. The nice thing is that the lenders are open-minded when it comes to equipment — we’ve heard of lenders financing medical equipment, office equipment, large machines, and even golf-balls!
  • Hard Money Loan: A hard money loan is usually financed by a private lender and usually boasts high interest rates. When you can’t find any investors or banks to finance your deal, this is probably your last option. Because these lenders will do high-risk deals, they will usually ask for high interest rates and possible fees to do a deal.

If you haven’t listened to our podcast on Debt vs Equity, you should. It will help you understand the difference between the 2 types of financing for your company. The majority of the time, it is cheaper for an entrepreneur to get debt than to raise equity capital — listen to the podcast and you’ll understand why.

One of the major initiatives that we have taken at FundingUniverse over the past few months is to increase the amount of financing sources for our entrepreneurs. The reality is that not every entrepreneur will be successful raising angel capital (in fact, statistics show that only 2-3% are successful — though it IS our #1 goal to increase those percentages), but a lot of you will be a good fit for equipment financing or factoring loans. For that reason, we are adding more and more financing sources to our network so that more and more of you can get funded.

Good luck!