Pinnacle Consultants L.L.P.

Helping Businesses Reach Their Financial Peak

Financial Review

How Can I Get Funding For My Business?

One of the keys to a successful business startup and expansion is the ability to obtain financing.  Raising capital is the most basic of all business activities.  But as many entrepreneurs who are just beginning quickly discover, raising capital may not be easy.  It can be a complex and frustrating task.  However, if you are well informed and well prepared, you can significantly increase your chances of success.

Be Prepared

Many entrepreneurs see obtaining capital the same way they see personal credit, fill out the short application and get your funding. This is not the case with commercial financing!  Financing sources are in the business to make money, they want a return on their investment commensurate with the risk they are taking.  To be successful in obtaining financing, you must be prepared and organized!  You must know your business inside and out. You must know how you are going to be successful in your marketplace.  You must also know how much money you need, how you are going to use the money and how you will pay it back with interest. You must convince your financing source that you are indeed a good business risk!   Completing a comprehensive business plan for your business can be a good first step in preparing for a meeting with your financing sources.  This business plan will include the majority of the key information the financing source will be looking for such as: business description, management profile, market information, operations plan and a financial plan.

Know What They are Looking For

Most sources of financing will be looking at the following areas when determining if you are a good business risk: 1) What is the character of the borrower, do they repay their debts? 2)  Does the borrower have the capacity to repay the loan? 3) Is the borrower committed to making this business successful, do they have a significant portion of their own money invested in the business? 4)  What are the conditions of the economy and industry they are in? 5) Do they have any collateral to secure the financing? 

Financing Sources

There are several financing sources to consider when looking for funding.  It is important that you explore all of your options before making a decision.  The most common funding sources for startup businesses are personal savings and family and friends.  Other sources of funding can include: banks, which generally provide loans and lines of credit to businesses, financing companies, which provide accounts receivable and inventory financing, angel investors, which are private investors, such as your lawyer or doctor, that provide equity capital and expect higher returns on their investment, and venture capitalists, which are professional investors that invest in new, high risk businesses and expect an even higher return on their investment (i.e. 20-50% / year).  You should also consider financing from key business partners such as suppliers and customers who may have an interest in your success.  Government agencies can also be a good source of funding, especially if your venture will create new jobs in their city or municipality.

One of the keys to a successful business is having the financing needed to grow your business.  Raising capital can be a challenging and time consuming task.  However, if you are well informed and well prepared, you can increase your chances of success significantly.  Know your business, have a good business plan, know what your financing sources are looking for, find the right financing resource for your business and "never, never, give up."  Winston Churchill, Sir (1874-1965)

Thank you for your continued interest in Pinnacle Consultants.  If you would rather not receive e:mails with news, updates and tips from the financial world, please click the following link paul@pinnacleconsultants.org


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Special Points of Interest

  • Financing sources are in the business to make money.   They want a return on their investment commensurate with the risk they are taking.

 

  • There are several financing sources. Some of these financing sources include: family, friends, banks, financing companies, angel investors, venture capitalists, business partners and gov't agencies. 

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Pinnacle Consultants L.L.P.

20704 N. 90th Place

Unit 1049

Scottsdale, AZ 85255

P: 480 980-3977

F: 480 585-1920

Website:

www.pinnacleconsultants.org

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Contact Us:

paul@pinnacleconsultants.org

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