How To Finance Your Business

Presented By: Grant Barra

Business plan.A business plan is a plan for the upcoming three to five years for a company. It is made up of several components and is meant to be a living document, one that is able to grow and change as the needs and abilities of the business change. The first step of creating a business plan is developing a thoughtful executive summary that encapsulates the entirety of the business plan and sources the company goals and profile.

Funding request

If part of the purpose of placing together a comprehensive business plan extends to submitting a funding request from potential investors, this will become a section of the business plan. Within it one should include the amount of funding the company requires and the projected amounts for the upcoming five years. Details of how the funding is to be implemented should be explained in detail, as well as the preferred type of funding and associated terms. Finally, any important financial plans for the future should be outlined.

 Financial projections

Including a financial projections segment in the business plan allows stakeholders to get a big picture of where the company plans to go over the coming years. Although it may be tempting to put goals and hopes in this section, it requires hard data. This section should only be completed after a market analysis has been completed and realistic and clear objectives defined. This allows a business to allocate resources effectively.

Historical financial data is an essential component of creating solid financial projections. Creditors will want the information for the past three to five years of an established business. Businesses that are new will obviously not have this information, but any financial history available should be included. Items such as balance sheets, cash flow statements and income statements should all be included. Any business property such as buildings, vehicles or machinery that could be used as security should also be included.

Prospective financial data needs to be created to give creditors an apparent understanding of how the businesses are expected to thrive and grow. The first year of data can be provided in monthly or quarterly segments, while the following four years can be yearly. Documents which should be included are estimated balance sheets, capital expenditure budgets, income statements and cash flow statements. All projections should be in line with the funding requests.

Business loans

There are several ways to approach securing a business loan. The Small Business Administration (SBA) offers several loan programs designed to accommodate a variety of needs. The other option is to approach banks or other private financing agencies. It is best to take the time to examine all available options before committing to one path.

The primary loan programs offered by the SBA include general small business loans, the microloan program, disaster loans or real estate and equipment loans.The Microloan Program offers businesses short-term loans which are most frequently used for inventory, supplies, working capital, furniture or other equipment. 

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.

Grant Barra

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