FAILING

Ways to Finance Your Latest Business

Venture
Get a Bank Loan
Lending standards have gotten much stricter,
but banks such as J.P. Morgan Chase and Bank
of America have earmarked additional funds
for small business lending. So why not apply?
Use a Credit Card
Using a credit card to fund your business is some
serious risky business. Fall behind on your
payment and your credit score gets whacked. Pay
just the minimum each month and you could
create a hole you'll never get out of. However,
used responsibly, a credit card can get you out of
the occasional jam and even extend your
accounts payable period to shore up your cash
flow.
Pledge Some of Your Future Earnings
Young, ambitious and willing to make a bet on your future
earnings? Consider how Kjerstin Erickson, Saul Garlick and Jon
Gosier are trying to raise money. Through an online
marketplace called the Thrust Fund, the three have offered up
a percentage of their future lifetime earnings in exchange for
upfront, undesignated venture funding. Erickson is willing to
swap 6 percent of her future lifetime earnings for $600,000.
The other two entrepreneurs are each offering 3 percent of
future earnings for $300,000. Beware: the legality and
enforceability of these "personal investment contracts" have
yet to be established.
Attract an Angel Investor
When pitching an angel investor, all the
old rules still apply: be succinct, avoid
jargon, have an exit strategy. But the
economic turmoil of the last few years has
made a complicated game even trickier.
Secure an SBA Loan

With banks reluctant to take any chances with their own

money in the wake of the credit crisis, loans guaranteed
by the U.S. Small Business Administration have become a
hot commodity. Indeed, funds to support special breaks
on fees and guarantees on SBA-backed loans have run out
a number of times. And while SBA-backed loans are open
to any small business
Raise Money from Your Family and
Friends
Hitting up family and friends is the
most common way to finance a
start-up. But when you turn loved
ones into creditors, you're risking
their financial future and
jeopardizing important personal
relationships.
Get a Microloan
The lack of a credit history, collateral or the inability to
secure a loan through a bank doesn't mean no one will lend
to you. One option would be to apply for a microloan, a
small business loan ranging from $500 to $35,000.
Microloans are often so small that commercial banks can't
be bothered lending the funds. Instead of a bank, you need
What is an Organizational Chart?

An organizational chart shows the internal

structure of an organization or company. The
employees and positions are represented by
boxes or other shapes, sometimes including
photos, contact information, email and page
links, icons and illustrations. Straight or elbowed
lines link the levels together
z

How to Obtain the Right

Financing for Your Business
Estimating Financial Needs
If you seek the help of a financial planner, you
need to make sure the one you choose is
appropriate for your needs.
However, if the business is just starting, it can be
very difficult since there is no universal method for
estimating startup costs. The Small Business
Administration (sba.gov) suggests that you
consider the following:
Determine seed money needed to start up.
Determine which costs are onetime costs.
Determine ongoing costs.
Separate your costs into fixed (does not change) or
variable with sales.
Do you need to renovate the facility?
dentify which costs are essential or optional.
Fixed assets are those that are of a relatively permanent
nature and are necessary for the functioning of the
business.
Working capital is current assets, less current liabilities,
that a firm uses to produce goods and services, and to
finance the extension of credit to
customers.
 q uit y Fun di n g )
Equity finance (E to g m o n e y fu n d y o u r
e r n a tiv e t o b o rr o w in
An alt a n ) is in v es ti n g e it her
(e .g . a tr a d it io n a l ban k lo
bus in es s so m e o n e e ls e 's
e y (i f y o u have it ) o r
your o w n m o n an c in g .
. T h is is call e d e q u it y fin
money in y o u r b u s in e ss
d e b t f in a n c e a n d eq u ity
m a in d if fe re n c e b e tw een
The m e s a p a rt o w n e r o f
is th at th e in v e s to r b eco
finance it th e b u s in e s s m a k e s.
n e s s a n d s h a re s a ny p ro f
you r b u s i
:The main sources of equity capital are
family and friends - an important source of equity
for new businesses
 business angels - wealthy individuals
who invest their own funds (typically
up to $2 million) into start-up
businesses with strong growth potential
 venture capitalists - professional
investors that invest funds (generally
$2-10 million) in operating companies
with high growth potential
public float - raising money
by issuing securities (e.g.
shares) to the public.
Advantages of equity financing
Freedom from debt - unlike debt finance, you
don't make repayments on investments. Not
having the burden of debt can be a huge
advantage, particularly for small start-up
businesses.
 Business experience and contacts - as
well as funds, investors often bring
valuable experience, managerial or
technical skills, contacts or networks, and
credibility to the business.
Follow-up funding - investors are often
willing to provide additional funding as
the business develops and grows.
DISADVANTAGES OF EQUITY
FINANCING
Shared ownership - in return for investment
funds, you will have to give up some control of
your business. Investors not only share profits,
they also have a say in how the business is run.
While this has advantages, you need to think
carefully about how much control you
surrender.
 Personal relationships -
accepting investment funds
from family or friends can
affect personal relationships if
the business fails.
 Time and money - approaching
investors and becoming investment-
ready is demanding. It takes time and
money. Your business may suffer if
you have to spend a lot of time on
investment strategies.
Angel Investor

Angel Inverstor now refers to anyone who

invests his or her money in an
entrepreneurial company (unlike institutional
venture capitalists, who invest other people's
money).
REASONS WHY ANGEL INVESTING IS BEST FOR
SMALL BUSINESSES
Quick Approval
Without institutional investors,
stockholders and board members, angel
investors are freer to operate and invest.
A Personal Touch
Any investor puts in money with the
intention of getting it back with profit. 
Getting the much-needed Funds
Angel investors often give the funds in form of a lump
sum. “This is of immense benefit for quick growth of a
venture. In most other types of investments, money is
released in instalments and is mostly spread over time,”
Independence
The best thing about angel investors is that they
don’t aspire for board memberships or take
interest in future funding.
EXIT STRATEGIES FOR
INVESTORS
 Merger & Acquisition (M&A).
This normally means merging with a
similar company, or being bought by
a larger company.
 Initial Public Offer.
 Startups, you can do initial
public offers (IPO) where you
sell a part of your business to the
public in the form of shares.
 Make it your cash cow. 
If you are in a stable, secure marketplace, with a
business that has a steady revenue stream, pay
off investors, find someone you trust to run it
for you, while you use the remaining cash to
develop your next great idea. 
 Liquidation and close.
 Even lifetime entrepreneurs can decide
that enough is enough. One often-
overlooked exit strategy is simply to
shutdown, close the business doors, and
liquidate. 
,,,THANK YOU