Financing the Deal: Private Equity, Hedge Funds, and Other Sources of Financing.
Sources of financing for business & professional
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Transcript of Sources of financing for business & professional
Business Resource Group ™2012
SOURCES OF FINANCING FOR BUSINESS & PROFESSIONAL
Business Resource Group ™2012
Identified Areas For Financing:
Professional fees dues Office space rental Equipment and supplies Business fees such as permits/licenses, setting up business structure, etc. Setting up services such as phones, Internet,
etc.
Business Resource Group ™2012
Areas of Financing
Creation of marketing materials such as business cards, website, etc.
Cost of running a business including monthly fees
Professional service fees for accountants, lawyers, etc.
Employee wages Startup Loan Emergency funds Selling of professional idea or product or
services Strategic partnership Buy in ownership of the firms
Business Resource Group ™2012
SOURCES OF FINANCING
I. ExternalII. Internal
Business Resource Group ™2012
Internal Financing
Business Resource Group ™2012
i. Friends And Relatives
Funds from friends and relatives who believe in the
business and its service or product concept is a possible
route to take
Business Resource Group ™2012
ii. Life Insurance
Professional service
entrepreneur can also
convert their investments in
life insurance policies and
other insurance products as
a source of funds for their
business usually at a very
low value, funds borrowed
at very low interest
Business Resource Group ™2012
iii. Leasing
You should consider adopting leasing financing
especially for cost associated with the startup cost
rather than buy this equipment’s. A lease requires little
or no money down and is an alternative to purchasing
such item as cars machinery or office equipment
Business Resource Group ™2012
iv. Retirement Plans
Professional can also use their
retirement plan as an alternative
source of financing for
professional seeking to fund
their businesses. There are
various independent retirement
plans that are flexible that allow
professionals to borrow against
vested benefits.
Different countries would have
different retirement plan
arrangement from which people
can borrow from them.
Business Resource Group ™2012
v. Informal Saving Sector
Internally in most corporate set up professional have
adopted internal revolving and informal revolving funds,
to advance lump -sum amount to meet the welfare and
economic needs of members. This revolving funds if well
harnessed, the professional could use them to fund start up
Business Resource Group ™2012
vi. Venture Capital
Private equity firms and venture
capitalist are also an additional
source from which professionals can
look towards as they seek
alternative source of finances that is
not attached to specific collaterals.
It is recognized that these P/E & VC
could support startups and
emerging growth companies that
that are run by professionals but
rather lack access to bank loans and
capital markets access to funds in
form of equity into their businesses.
Business Resource Group ™2012
vii. Personal Savings
Professionals would also
easily use their professional
earning saving to make it a
source for financing for
their business in future or
when they might require it.
Business Resource Group ™2012
viii. Sell Assets
Asset sales to relatives and
friends can offer a neat and
relatively simple alternative
to either loans or equity
deals. Put simply,
professional service firms
can sells one or more assets
to someone or a firm they
know or trust, the firm
Business Resource Group ™2012
ix. Rewarding A Loyal Management Team
Professional service businesses can also start up schemes
in their business that is aimed at rewarding loyal
management team to invest in professional business since
they share your vision, Partners can give loyal
management between 10% to 30% equity in this business
Business Resource Group ™2012
x.
Profit ploughed back into the firm as reserves
Business Resource Group ™2012
xi. Trade Creditors
A very important source of financing for
your professional service business may
be from the creditors and suppliers
with whom you do business
Business Resource Group ™2012
External Finance
Business Resource Group ™2012
i. Government Funds
Many government have set up fund that can
easily be used by new start up & young
professional, one of the objective of this fund
is to attract and facilitate investment in micro,
small and medium enterprises oriented
commercial infrastructure such as business or
industrial parks, stalls, markets or business
incubators that will be beneficial to youth
enterprises
Business Resource Group ™2012
ii. Money Lenders
Borrowing from money
lenders business incurs
risk and charges a
corresponding rate of
interest based on that
risk. The lender usually
assesses a variety of
factors such as the
strength of your
business plan, and your
personal credit history.
Business Resource Group ™2012
iii. Cooperative Society
Professional can also access
funds available through
various professional saving
and cooperative societies
where they are members. In
Some countries there are a lot
of professional SACCOS, and
they continue to provide low
interest rate loans, spread
over long terms than banks
and usually will not require
collateral other than
guarantee, which is easily
provided by fellow
professional reference
Business Resource Group ™2012
iv. Loan From Banks
These are funding from
commercial, the community banks
and specialized bank like CDSC
accounts. Professionals with
investments held in stocks can
borrow on account of these
investments. And those with collateral held in
group, partnership or joint venture
entities can also borrow on this
accounts.
Business Resource Group ™2012
v. Selling Your Business Ideas- Business Partners
Professional with vast experience and with new ideas to
set up businesses could as well begin to sell their ideas
and concept high networthy individuals willing to invest
their fortunes in their businesses.
Business Resource Group ™2012
vi. Multinationals
Some multinationals in
their attempt to set up a
foot print in the local
market have failed so they
are likely to support local
professional service firms
and create a working
relationship.
Business Resource Group ™2012
vii. Strategic Partnership- Corporate Support
Strategic partnering ,
they're the best alternative
for many companies that
find themselves either shut
out of traditional finances
deals or unwilling to
swallow the equity
valuations or interest
charges required to make
those deals happen.
Business Resource Group ™2012
viii. Debentures
Just like shares,
DEBENTURES are also
instruments for raising long
term finance “Debenture is
a document that either
creates a debt or
acknowledges .
Business Resource Group ™2012
ix. Securitization
Is the financial practice of pooling various types of
contractual debt and selling said consolidated debt as
bonds, pass-through securities