How Do You Actually Receive Funds From Financing Sources?
All of the sources of financing discussed have one critical point in common: they all require that you sell your ideas and plans to someone who controls the money you need. In this sense, you shouldn’t underestimate the importance of being a good salesperson. The responsibility is on your shoulders to share a sense of excitement about your business with the person or organization evaluating your request. This remains true regardless of whether you decide on debt financing, equity financing or a combination of the two.
If you plan to borrow money, there are certain elements of the borrowing process that are critical to your success. You and the investor have different goals. If you are starting or have already started a business, chances are you strongly believe you will be successful. The investor, however, will not have this same degree of confidence in you and needs to be convinced of your sincerity and of the validity of your ideas. The lender’s goal is protection of his or her investment, while yours is more likely financial growth.
The investor will need documentation of virtually every statement that you make. If you say your business will grow by 10 percent per year for five years, be prepared to support your claim with facts and figures.