Posted on

Think Like an Investor and Consider What Leads to Business Failure

Investor

 

To successfully land funding, you need to think like investor when reviewing the business plan. If you were considering lending money to a business what would be one of your first concerns? Naturally it would be the chances of the business failing. An investor lends money with the intent on getting a return on that investment. So it makes sense that the business plan should be evaluated from the same perspective by the business owner.

Small businesses have a high rate of failure according to the Small Business Administration. There have been many studies done to determine why this is so. These studies have identified common errors that businesses make, so you want to consider these problems before they ever become an issue. Realistically, potential investors will have them in mind before agreeing to lend money so being prepared to respond is important.

Typical reasons for small business failure include over-expanding to prove growth to investors, underestimating expenses or overspending, assuming too much debt based on revenues and cash flow and underestimating the competition. Also included on the list are choosing a poor location and lack of capital. The likelihood of these factors occurring in your business will be considered by investors evaluating a business plan.

If you have already thought through the reasons for failure, investors will recognize that fact. For example, location is high on the list of reasons for small business failures. Presentations to investors, therefore, should address the choice of business location and explain the competition and accessibility by customers. Making sure you address the reasons why your business could fail is an important step towards ensuring it doesn’t.

Who we are:  Funded.com is a platform that is A+ BBB rated over 10+ years. Access our network of Investors, get instantly matched with a Lender, or get a business plan by visiting us Funded.com

You can review our featured partners to help your success with your business or project.

Posted on

Brand Your Business to Attract Investors

Investors are going to be attracted to a business that has a strong and reputable brand. When a business is ready to expand and needs a capital injection, having an established brand adds value to the business proposal. A positive brand is a business asset because it differentiates the business. That is the kind of business characteristic investors will look for as part of their business plan analysis.

Investors are well aware that brand recognition gives a company a competitive edge.  A business already established in the marketplace creates a brand image either purposefully or by accident. A brand created purposefully should reflect the positive image and reputation of the business based on the product delivered and the customer service. A brand created by accident may or may not be positive.

Branding is a message sent to the marketplace, but it can also help you deliver a message to investors. Investors know that a good brand image, even if the company is young, is important to future success. Customers are more supportive, and marketing can be more effective when the business has a solid brand image.

Branding can also be the common theme that ties together the business plan, products and services, customers and employees. It is related to the business culture and thus has specific value. Investors considering funding a business will be more likely to do so when the brand image is well accepted in the marketplace and employees can take pride in what they offer customers.

Browse www.funded.com for more advice about getting your business funded.

Posted on

Attract Investors by Improving Cash Flow Before Cash is a Problem

One of the important factors investors consider when evaluating a business plan is the amount of expected cash flow. They scrutinize the assumptions that were made in order to make a determination as to their validity. One of the lessons to be learned from investors is that you can improve your cash flow before you even have cash flow to report.

What does this mean? It means that the steps that are taken to improve cash flow for an ongoing business are the same steps that should be incorporated in the cash flow statement included in a business plan. Sound business practices can and should be used to prepare the cash flow projections. In fact, one of the first rules of cash flow is to prepare a realistic projection. Investors evaluating a business plan will carefully review the assumptions made in view of the marketplace conditions. Sometimes businesses are tempted to overstate cash flow in the belief this increases the chances of funding. However, investors have a lot of experience evaluating cash flow statements and overstatements will be spotted.

When preparing a cash flow projection, you need to consider the factors that influence cash flow during operations. The projection should assume reasonable customer terms and collection policies. The business plan should also reflect market segmentation based on products. For example, the timing of inventory purchases is influenced by the type of products sold. Cash left in the bank will earn interest that can be included in the cash flow statement, while cash invested in inventory is tied up until the inventory is sold.

These are the types of detailed analysis the entrepreneur needs to do long before a business plan is presented to investors. In other words, you want to be able to prove you know how to maximize cash flow based on realistic assumptions and best practices.

Browse www.funded.com for more advice about getting your business funded.

Posted on

Listen to Investors and Learn About Internet Startups

Investors will tell anyone who wants to listen that the internet has changed the face of investing in some respects and maintained investing rules in other ways. Early stage internet businesses can now start on the proverbial dime which has encouraged entrepreneurs to jump into business enterprises. However, just because you can start a business cheaply doesn’t mean you can keep it going.

Though there are stories of businesses like Facebook started in a dorm room and now sold for billions that is not the typical story. Yet the success of Facebook and other startups bought by larger internet businesses like Facebook make it clear that there is a market for these types of startups. In fact, the Wall Street Journal ran a story that discussed the fact that each year there are 15 winning tech companies started each year, and they are able to grow because of investors willing to fund seed-stage and young companies.

There are some lessons to be learned by the tech company successes and failures. For one thing, investors now expect new internet businesses to have a substantial following before they seek funding. That is a reflection of the fact that there are thousands of internet based startups every year so investors can be selective based on the sheer quantity of businesses. The good news for young internet businesses though is found in the fact that investors are looking for the next great internet companies. They want to help startups and they want to see entrepreneurs with great ideas succeed.

That is the real lesson to be learned from the internet winners and losers – everyone has a chance to be winner.

More detailed information and useful advice can be found at www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

Posted on

What Investors Want to Find in a Business Plan

Entrepreneurs listen to professionals working with investors tell them over and over again that they need to develop a business plan. Instead of getting help, some managers finally develop one on their own, but it doesn’t take long to figure out that it lacks real effort. Investors are savvy and have read hundreds of business plans so recognize when a plan has been assembled in a haphazard manner.

In other words, you can’t fool the experts. A business plan lacking quality reflects a lack of concern about the business brand and on the business owners and management. A poorly designed business plan also sends a message that the business owners have not taken long range planning seriously and so casts doubt on the ability of the enterprise to succeed over the long term. It will be almost impossible to attract investors with this kind of business plan. Investors need confidence that their funding will be used in a successful business model that will earn the return expected.

What constitutes a poor quality business plan? First, they typically leave out important sections like the market analysis. Secondly, a plan that is poorly organized and difficult to read makes it nearly impossible to find information, and that discourages investors. Third, a business plan filled with typos and grammatical errors indicates that no one read the plan more than once or that it was written quickly with little thought. Fourth, a plan with inadequate research and lacking data and facts that can be verified will also turn investors away.

If you want to ensure investors pay attention to your business plan, then you need to pay attention to it too. To get the attention of investors, entrepreneurs need to develop a solid plan that reflects thoughtfulness, research and long range planning.  A high quality business plan is a blueprint for success, and that’s exactly what investors are looking for – success potential. If you are not comfortable writing a business plan then the first step to take is getting experienced help with the preparation. There is just too much riding on the business plan to do otherwise.

Browse www.funded.com for more advice about getting your business funded.

Posted on

Think Twice Before Choosing Crowdfunding When Looking for an Investor

Finding investors often consumes the attention of small business owners. Money is always an issue when businesses are ready to expand. Given the proven power of networking and the power of the internet, it should not be surprising that a new form of equity funding has been developed. Crowdfunding is the new investor kid on the block, and it’s generating a lot of excitement because it seems to cut out the middleman, so to speak.

Crowdfunding was approved by the JOBS Act in April 2012 and allows small business enterprises and startups to directly solicit investors for equity investments. It sounds great at first glance, but for many companies it would be more strategically advantageous to go through a professional fund locator company rather than try to raise equity funding on their own. The details of crowdfunding are still being worked out, but there are already indications that small businesses are viewing this as ‘easy money’. That’s far from the truth.

Crowdfunding will still require the business to prepare a business plan that proves the investment is wise. Crowdfunding involves investors pooling their money. Businesses can then solicit as a maximum $1 million investment. However, each investor will get equity ownership in the business. If the business expands in the future and needs a larger capital amount, success may be hampered by the fact the company now has dozens or hundreds of equity owners. Venture capitalists may not be anxious to get involved in that kind of arrangement.

The best plan is to consult with a professional experienced in raising capital for businesses. Understanding all the ins and outs of new sources of funding is critical before deciding to jump in.

Browse www.funded.com for more advice about getting your business funded.

Posted on

The Right Investors for the Right Business

Finding the right investors for small businesses is often top of the list for entrepreneurs. It’s tempting to cast a wide net and see who shows any interest. That may work sometimes, but it often leads to a lot of wasted time and possibly loss of some control over your business – a loss that was not intended.  It’s much wiser to go after the right type of funding and maintain control over the process. There are so many different kinds of investors that you can target, and you want to attract the ones that fit your strategic goals to save time, effort and money.

Investors all have one thing in common – they want to get a decent return on their investment. However, they have different requirements concerning collateral, equity ownership, business control and investment payback time. Each of these issues must be carefully evaluated from the business and the potential investor’s perspectives. For example, venture capitalists may want to share control of the business depending on the circumstances. If you don’t want to give up control, it would be wiser to attract angel investors or apply for a business loan.

Small businesses need to exercise the same type of caution with investors as the large corporations do. Matching the right investor to the right investment is a formula for success. However, it never pays to get too excited about accepting funding from investors unless you fully understand the advantages and disadvantages of that particular type of investment. The reason there are so many types of investors is because there are so many different types of business needs.

More detailed information and useful advice can be found at www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

Posted on

Social Responsibility and Investors

The relationship of corporate social responsibility and investors was studied by Ioannis Ioannou of the London Business School and George Serafeim of the Harvard Business School. The 2010 study was titled, The Impact of Corporate Social Responsibility on Investment Recommendations. As the title suggests, the social responsibility strategies were analyzed from the perspective of their influence on security analyst decisions concerning investing in companies.

The results were clear. The value of socially responsible strategies has risen in the minds of investors. The study also reported that firms seen as socially responsible are viewed more favorably by analysts and the more visibility the better. Social responsibility is value creating.

We tend to think of large corporations as being the only firms that need to be concerned about social responsibility. Unfortunately, many also view social responsibility with a bit of cynicism, believing that it’s a ploy to sell products and services. However, if that were true businesses would only do or spend just enough to attract investors and never go beyond the minimum. Yet even small businesses are found in the community as their employees volunteer time and money to local nonprofit efforts in a variety of areas. They help clean up the environment, raise money for hospitals and special causes and sponsor programs in childhood education and adult job training, to name just a few activities.

Social responsibility is a broad concept that addresses ethical business behavior and sensitivity to community issues. Those issues include economic, social and environmental aspects. All companies can increase their value by addressing the needs of its community stakeholders and by following ethical business practices. When businesses increase value, it’s easier to attract investors. Social responsibility is a win-win proposition.

Browse www.funded.com for more advice about getting your business funded.

Posted on

Business Plan Writing When the Economy is Less Than Desirable

Writing a business plan for a new business to secure funding in a weak economy may seem like an impossible task. That’s the wrong attitude to have though because it’s actually quite the opposite. In a weak economy funders are looking for innovative and creative ideas that give them an opportunity to make a profitable investment when other financial vehicles are experiencing low returns.

Investors have trouble making money when the Federal Reserve is keeping the federal funds rate at 0 to one-quarter percent. In fact, the U.S. Central Bank Open Market Committee just reiterated on April 25, 2012 that it’s holding interest rates to near zero levels through the end of next year. That means investors must turn to alternative investments to compensate for lack of opportunity in the traditional financial markets.

Writing a business plan in a less than desirable economy should be viewed as an opportunity rather than an impossible task. As an entrepreneur, you are presenting the opportunity to increase investor cash flow and earnings. The business plan can also prove that a weak economy offers unique competitive conditions that increase the odds of success.

For example, the high unemployment rate means specialized labor is available at affordable wage rates. Another business advantage is the fact many potential competitors have already gone out of business which creates market opportunities. Also, the marketplace is ready for innovation in an economy that demands high performance levels. Your business plan can present strategies that take advantage of these opportunities, and that’s just the kind of thinking that gets the attention of funders.

So don’t think of the weak economy with discouragement. Think of it as opportunity for innovation, and then present those opportunities in your business plan with confidence.

More detailed information and useful advice can be found at www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

Posted on

Removing Barriers to Minority Business Success

The minority business owner developing a business plan can do so with the knowledge that angel investors offer non-traditional funding sources that break down barriers to opportunity. It’s no secret that minority and women businesses (MWBEs) have faced hurdles in areas of market access and financing over the years. That is changing with growing awareness and education of the marketplace and a growing robust effort by corporate America to improve access. The increased knowledge and awareness has also positively impacted the private funding market which only serves to expand opportunity.

Breaking down barriers to access benefits everyone. Minority and women entrepreneurs are innovative and bring new perspectives to the marketplace. Angel investors can help them bring that innovation and creativity to the marketplace more easily by working outside of the mainstream financing system. A match between angel investors and an MWBE can produce results.

Of course, the MWBE entrepreneur must still use proven strategies that increase the likelihood angel investors will accept the business plan. When presenting a business plan to potential investors it’s important to show confidence and leadership, prove thorough knowledge of the competition and the industry, and above all, ensure the innovation and creativity of product, service and business is made abundantly clear. Once a company obtains angel investing, it is easier to move up a step into the next phases of financing which include venture capital and eventually commercial funding.

Angel investors can be ‘angels’ in many ways. They are not hemmed in by traditional processes which is exactly the way traditional barriers can be broken down.

More detailed information and useful advice can be found at www.funded.com Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.