The number one objection I have to Web 2.0 is the lack of definition for the term itself. Whenever there is a "buzz" about something people can't quite define, I tend to believe it's not real. Or at least, the idea is still in a formation stage. We heard this in the 90's, "the Internet is changing the very fundamentals of business." But when you asked people how, they couldn't really answer. Their only reply was: "You'll see." Well, we certainly saw. Business is business, and always will be. There needs to be a return of x percent in y years, or investments generally are not offered.

Will Web 2.0 bring new and interesting ways to make money? I think so. I'm quite intrigued by the possibilities. But my money is on the sidelines at this point. I think that the money that's out there now is somewhat foolish. Maybe foolish is a little harsh. It's the early-adopter money. It's a typical investment pattern, really. The early money will largely be lost, but is necessary to help define how to use a new technology. The 1% who make it through the first few years will see incredible returns. The other 99%, well...

Many of us want to become an entrepreneur. But, for becoming a successful entrepreneur you need to have financial support in order to start your business venture. An unsecured business loan would be a viable loan option, if you think that your business needs are small.

Finance is not only needed while starting a business venture, but is also a necessary factor if you want to expand your existing business. An unsecured business loan can be used as a funding solution for all these factors.

Your business needs can be anything like buying premises, plants and machinery, maintaining cash flow, giving wages to the employees etc. But, before taking out a loan, you should consider whether you would be able to fulfil your business needs with this loan type or not.

With unsecured business loans you don’t need to put your property as collateral. Since, there is high risk associated with this loan type; the lenders charge a higher interest rate against it. But, due to the stiff competition among the UK private lenders, one can borrow a loan on competitive interest rates.

The best part with this loan type is that you can avoid the threat of repossession of your property. Apart from this, you can seek a fast loan as compared to a secured loan. The reason behind this is that a significant amount of time is saved as the valuation of collateral doesn’t takes place. There is less paper work involved with this loan type which reduces the hassles in availing the loans.

There are many loan sites in the UK where you can do a search for online unsecured business loans. If you apply for the loans on any of these loans sites, you will get loan quotes from different lenders across UK. After getting the loan quotes, you will be in a position to select a good loan deal for yourself.

The market may change and make things difficult and you could be left with the bitter taste in your mouth of not having taken the decision at the right moment. Business is not only about buying and selling. It’s about taking the right decisions at the right moment.

Don’t Let Others Beat You To It

If you have detected a niche in the market that you can fill in, go for it. Don’t waste time watching to see what happens, whether it is the right moment or not. Waiting gives your precious time to others. Rushing to do things without a proper planning isn’t good either. You have all the ideas in your head, so just write them down, on paper or on your computer and make a checklist of everything you need to open your business.

Niche Marketing

Your first attempt should consider every nail and every sheet of paper needed to get your business going. There will always be time to cut down on unnecessary things later on. I talked about a “niche” above, because niche marketing is very interesting. Once you detect the niche and the needs it has, you tailor a product or service for that niche and you already have a market, without having to spend precious cash on random advertising. What little advertising you will have to carry out, will be specifically directed to your niche.

You will have time later on to expand and add products to your line, innovate and improve, to widen your scope, a little at a time, so as to grow steadily and firmly and surpass the critical moment. It is said that 80% of new businesses do not make it through the first year.

Start Closing The Circle

Once you have your business plan ready, you can start to think of a business loan. Considering what is mentioned in the previous paragraph, every lender knows the risks that a new business implies. So, this risk will have to be shared, in the form of the provision of some asset of yours, whether private or dedicated to the business, to show confidence in your own project.

Very few loans will be granted on the business plan alone, however brilliant it may appear, so bear this in mind and place your car, truck, a piece of land, whatever it may be, as collateral from the very beginning. Don’t wait for the lender to ask for it.

Some Additional Considerations

When you start to fill in the numbers in your business plan, consider the loan payment in advance. If you take the trouble to calculate how much you need and how you will repay it, making it participate in the general cash flow, it will give the loan officer a good impression. For this, you will need to shop around and get free quotes, not to be confused with applications.

The interest rate will vary slightly from lender to lender and depending on the amount and collateral you offer, but in general there is no great difference. The main difference in these matters is your decision and how you prepare your way for your new activity.

Small business grants are not just given away by government agencies or private institutions for helping you start your business. There needs to be a particular interest in your project in order for them to provide the funding that you need. And it’s not enough to have a good idea in order to obtain finance for it; you need to have a well made business project to convince them of your eligibility.

No Credit Or Income Requirements?

Though there is no need to reimburse the money on government grants, claims that state that there is no credit or income requirement in order to get approved for a government grant are far from being truth. Truth is that the requirements for approval are not present in the same sense as on private or federal loans but there is still a qualification process.

You may wonder then, what is needed in order to qualify for a government grant. The idea is that you’ll need to show that your business project is viable, and thus, you’ll need to show that you can be trusted which implies having a fair credit score and the ability to generate a proper income to show proof of the business viability.

Presenting a Viable Business Project

What you need to understand is that prior to requesting a government grant, you’ll need to prepare a presentation of your business project. This obviously implies having a project and not just a mere idea. There must be certain degree of research done with market analysis to prove the viability of the business and the income generation capacity.

Though the money doesn’t need to be returned, the government agency is interested in investing the money in a project that will endure in time and that will keep generating job positions and revenues thus boosting the economy and the welfare of the nation. The particular requirements of each government grant need to be consulted with the government agency that provides them.

Getting Approved For a Government Grant

The key to getting approved for a government grant is to present an appealing business project that shows great feasibility and relates to those fields that the government is interested in promoting. If you don’t meat the requirements for a government grant approval, there is not much you can do about it. Yet, if you do qualify, it is important to be well informed prior to applying in order to take the proper steps and avoid getting declined due to bureaucratic reasons.

If you can’t qualify for a government grant, don’t despair and use the opportunity to consult about government business loans that are sometimes offered with subsidized interest rates and very affordable payments.

Small Business Resource Guide. The "How to Where to Guide" for all small business on advice, money, financing, public funding, grants, capital seed, venture capital, networking, product development, research, education, management and start up business plans. Get small business loans and start up capital. US Government and local contacts for Cleveland and Akron Ohio.

Consortium of African-American Organizations Minority businesses, research, education. Information about starting or running a restaurant. Industrial Incubator - Management services, capital, seed, incubator, operations. Bio Enterprise - Business Plans, validation, assess, strategy, capital, seed, venture capital, research, incubator, advice. bio tech. Advice, public funding, manufacturing, operations, product development, info, intellectual, tech. network. Information about structuring a business plan sample plans. Services Offered Advice: Help with big picture management decisions such as how to make or price a product. Assess: Assessment or your business Concept. Management Help to develop managers. Plan Help writing a business plan.

Strategy Thinking or rethinking your business concept works. Validation Making Sure your business concept works. Capital Help Finding debt or equity to capitalize your business. Grants Help finding grants (which you don't have to repay).Micro Loans and help for very small or start-up business. Public Funding Leading programs tat gets some or all of their money from the Government. Seed Early stage money for business being developed. Venture Capital Investor equity that comes later in a company's development. Biotech - Biotech or bioscience business help. Incubator Buildings that offer, rent, utilities and technical help to small businesses. Marketing for your future. View Guide

The first step in getting a grant is looking at which government agency can help make this happen. Each one has a different set of requirements and it is only when the entrepreneur qualifies under this set of rules that the person is eligible.

If the federal government cannot help, perhaps the entrepreneur can try reaching someone in the state level.

One example is the Energy Innovations State Program in California. Inventors can get a $75,000 grant to fund research and development projects that are designed to help save the environment and offer an alternative source of energy.

In the state of Arkansas, people who want to put up a farm can get as much as $80,000 from the Arkansas Department of Economic Development.

These examples are just a few of what are available in the state level. Those who want to know more should visit the proper agency or department by going to the nearest office or making the same inquiries online.

One of the biggest advantages of a grant compared to a loan is that the entrepreneur does not have to return the money that was given. It will be nice though to show progress or even success with the project so that it will be easier to get another one that has more money in the future.

But again, the biggest hurdle for many is being able to get the first grant. The person will have to fill up the application form and then submit a proposal so that those in the committee can review this document as well as others before deciding who will get it.

If there is no feedback yet after a month, the individual can check the status of the application by typing in the CDFA number better known as the funding opportunity number in the state agency's website.

The entrepreneur may not get the grant on the first attempt. This is the reason many suggest to keep trying while at the same time, sending the same document to other agencies.

A large part of the nation's budget goes to grants in different levels. Last year, this figure stood at $350 billion dollars with the possibility of a slight increase in 2007. Although this amount may not be as high to those being offered to defense and healthcare, it is sufficient for those who need it even if others wish there was more.

You have your business idea, your business plan in tow, your ducks in a row, and you're ready to get your business off the ground except for one problem - you have no start up capital. Unless you were born into wealth and have it at your disposal, then you are like most small businesses and need a helping hand.

How can you raise start up capital? There are a few ways to go about it:

Small Business Bank Loans
Many financial institutions provide some type of small business loan program. In order to get funding from a bank for your small business, you will need a solid business plan. You'll have to prove that your business will generate enough cash to make the loan payments. Each bank's requirements are different but if you are able to articulate how you will succeed, have decent credit, and possibly a co-signer, you may be able to secure a small business bank loan.

SBA (Small Business Administration)
The SBA is a great resource that provides information on requirements, credit factors, how to apply for loans, etc. The web site is a good starting point before attempting to apply at a bank. The better prepared you are, the easier it will be when you begin the application process.

Family & Friends
A lot of small businesses raise start up capital this way. Family and friends usually want you to succeed and believe in your business. It is wise to treat these relationships as real business relationships. Plan how you will repay their loans, the time frame, and at what interest rate.

Angel Investors & Venture Capital Firms
Private angel investors and venture capital firms work primarily in the same way. They invest in the equity of your business and expect a return in the form of an acquisition, IPO, or stock buy back in the future.

The key to any of the above methods is to have a well written business plan. A good business plan will prove that you are serious about your business and that you can demonstrate the way you plan on making it successful.

You need to secure money for your project. You visit venture capitalists to see if you can get that money. A venture capitalist views your project as a pure investment. A venture capitalist has no emotional attachment unlike you. You need to write a proposal that is structured around a venture capitalists needs, not yours. What may interest you may have no relevance to your potential funder. You need a business plan that is ‘investor-focused’.

An investor focused business plan contains relevant information about your project. It addresses concerns, questions and should allay fears that any potential venture capitalist may have. It should meet their needs exactly. Venture capitalists exist to make substantial gains. They want to see a good return on investment. By compiling an investor focused business plan, it will be clear to Venture Capitalists that you are focused, prepared and competent.

There are four areas that need to be addressed:

Management Responsibility
Know Your Markets
Know Your Product
Know How Management, Markets and Product Make Money

Management Responsibility

The strength of management assigned to the project can make or break your proposal. Venture Capitalists need reassurance that you can manage their money. They will want to see a demonstrable track record in areas specific to the project you are pitching. The ability of management will be tested so be very prepared.

Know Your Markets

Venture Capitalists will need to see where your income will be coming from. Your company must demonstrate a strong understanding of your customer base and be able to fulfil their needs. Your plan also must address any potential new or growth markets. Illustrate any research you have conducted to emphasise this.

Know Your Product

Venture Capitalists will want to fully understand your product. They will want you to demonstrate how the product that they are funding will attract customers. The information in this section must be extensive and also feature any potential expansions or upgrades that your product will feature. This will show that you have thought about long-term growth.

Know How Management, Markets and Product Make Money

It must be demonstrated that management can create links and paths between customers and product. This element must be very strong as ambiguous information, or an assumed relationship will scare off any potential funder. Create a step-by-step guide of how their money will be processed and how the customers money will be received. This has to be clearly shown.

Tie in these points together and you are already in the top 3% of all venture capital submissions. Good Luck!

There are several structures that Private Equity funds (also known as venture capital funds) use when they give the green light to fund a company. The basic structures for private companies are common stock and convertible preferred stock. These structures usually contain an anti-dilution provision, so the lead investor doesn’t start out purchasing say 40% of your company for $4,000,000 and then end up with only 5% because you dilute his stock position with subsequent financing rounds.

1. A Common Stock. Common Stock funding structures are pretty simple. The company and investor agree on a dollar amount to be funded and the percentage of stock, also called the equity position, the investor will receive. Most private companies, however, will find they have very little bargaining power with private equity funds. Usually, it is the money that dictates the terms of the financing structure. Part of the reason is that if you don’t like the deal terms you don’t have to take the money. Another reason is that Private Equity firms know which structures work for them and which ones don’t.

2. Preferred Stock. Private Equity firms use Preferred Stock structures the most. The Preferred Stock is convertible into Common Stock, usually anytime at the option of the holder. The convertible Preferred Stock can be convertible into either a fixed number of shares of Common Stock or a certain percentage of the Common Stock outstanding on a future date. Most Preferred structures also have a built in dividend. The dividend could range from 6% to 12%. This allows the Private Equity firm to receive some return on its investment before the Exit Strategy is used.

3. Debt Financing with an Equity Kicker. Another possible structure, if your company is already operating and profitable, or close to it, is debt financing with an equity kicker. Although this structure will be difficult to get from a Private Equity firm, it is worth exploring.

You are more likely to get this kind of financing from Angel investors. Maybe even family and friends would even provide this type of financing if the amount is not too large and you have good cashflow. Say you feel $200,000 can get you over the hurdle and profitable. Structure the $200,000 as a 3 to 5 year loan and give the investor 10% of your company in common stock. The number of shares and percentage you give the investor/lender is based on the size of the loan and the value of your company. I only used 10% as an example.

4. Convertible Debt.Some investors will structure their funding as a convertible note or convertible debenture. This security is convertible at their option into Common Stock of the company. Usually they will not convert until the Common Stock is trading and they can get out of their position.

Smart investors will also use what is called a "4.9% Clause". I have used this many times for my private investor and hedge fund clients. Certain securities laws require investors that own 5% of more to make certain filings with the U.S. Securities & Exchange Commission (SEC). This allows investors to get around that requirement since the 4.9% Clause does not allow the investor to own more than 4.9% of the company at one point in time.

Also, if an investor owns more than 10% of a company they are deemed an "Affiliate" and a number of other rules kick in. An investor can remain more nimble with his investment without having to comply with these regulations. The 4.9% Clause also benefits the Management Team. If the investor can't own more than 4.9% of the company it is very difficult for the investor to take over the company or make management changes.

5. Reverse Mergers. A Reverse Merger is when an existing private company merges into an existing public company with a stock symbol, which is usually a “shell company”. A shell company is a public company that although still in existence and having a stock symbol, is no longer operating a business. The business plan obviously failed and that company went out of business, but the public entity or shell still exists. This is the key ingredient in the Reverse Merger.

There are two main types of financing for a business, debt or equity financing. Debt financing tends to be the type of financing you receive from a traditional bank loan and equity financing tends to be financing you receive from venture capital into your business from outside investors. The benefit of debt financing is that it is finite and you will pay down the debt over time to a zero sum balance without any further obligation to the lender. The down stroke to debt financing is that traditional lenders will take a hard look at your business including how long it has been in existence, income from operation, expenses and will require hard assets for collateral for the loan. Additionally, lenders will most certainly want you (and any other principals of the organization) to personally guarantee repayments of the loan. Another disadvantage of debt financing is that your organization will be burdened with some other type of regular payment (usually a monthly payment) depending on the terms and conditions of the financing and this can absorb critical cash flow, especially with small business.

The benefit of equity financing or venture capital is that you will be receiving money in exchange for equity in your business in the form of stock or some other form of equity like percentage of income or gross/net sales. A primary benefit of this type of financing is that typically there is no monthly payment requirement to investors. Instead, you are giving up ownership interest, most often, permanently.

Traditional lenders, banks for example, will look at your business much differently than venture capitalist. Bankers want a zero-risk or near-zero risk position when they provide financing and will rely almost completely on the operating economics of the business with little regard for “potential future growth”. They want to see strong cash flow backed up by hard assets before they do a deal—the ingredients that most small business lack or they wouldn’t be seeking financing, right? Venture capitalist, on the other hand, tend to consider the management team and the potential future growth of the business more heavily than actual operating numbers, especially for small business with large potential but few sales and little or no operating history. Although these two lender types vary in their approach to analyzing a business for funding, you can be sure that careful scrutiny of you business will be conducted…

Besides the actual operating economics and pro forma analysis, both types of lenders will look closely at two particular documents: 1. Your business plan. 2. Your bank or loan request package. These two documents, if assembled correctly, can make the difference between success and failure when dealing with either lender type.

There are plenty of free SBA related materials that tell you how to create blue-chip, boiler plate business plans but they tend to be written for perfect businesses and not the average Joe who is less than picture perfect. If you are seeking some type of financing for your business I strongly suggest that you visit our site and check out our business e-books. We have several that cover a variety of topics and there are specifically two that will be a real treasure for you to own. One is called Power Planning (a powerful report on writing a wide variety of business plans) and How To Raise Money For You Business (teaches you how to assemble professional loan requests packages). They are priced at $5 each and can be worth millions in the hands of the right person. I am not trying to hype product, I am simply giving you a heads up.

The secrets to getting financing from either type of lender is a closely held secret by financial and business brokers for a number of reasons. Chief among them is it forces people like you to do business with them and they earn commissions. The SBA materials, while good, do not have the street savvy to get the job done in most cases. The proof is in the pudding—what has the SBA ever done for you? The SBA is just another government back bureaucratic nightmare for most. We also have some links for venture capital firms in our business links area located on our site on the Smart Link Zone page—it’s all-free.

Give it some thought…. Your future may depend on it.

To your success! Copyright © 2006 James W. Hart, IV All Rights reserved

The most common road block to starting your own business is money. Unfortunately the freest way to get money (grants) has miniscule availability for business start up plans. If you are a non profit organization, the chance will be higher of receiving a grant. However, most new businesses are probably looking for profit. So how do you find money to start your business?

As mentioned, earning a grant is extremely difficult. Two clear situations have grant possibilities. First, if an individual has a very clear purpose deserving of a grant, it is possible to receive one. Second, but also along the same terms, you may be able to receive a grant if you are doing particular research with an outcome that benefits a government agency.

The Small Business Association (SBA) does not typically help owners find a grant. They can however be a great resource. If you access the SBA Web site you can find topics to help you with your business. The SBA also offers loans for your business that vary from small to larger amounts. Use the Web to gather loan information, ask questions and locate someone near your area to assist you. If a loan via the SBA is not possible, research several bank opportunities. Banks have a variety of different loans available.

You should be able to locate a bank that offers a loan fitting with your company's needs and financial abilities. If you decide to take out a loan, make sure you have committed to realistic payments. Your business idea is great and the business will soon be profitable; you can afford to extend the loan a little while. However, if you lose the business because you can't make payments, there is clearly no success.

An additional option is finding investors or selling commerce stock. Investors can be very valuable resources, but keep in mind that any investor also becomes part owner. Before making that commitment be sure the business's goals, values, mission and ethic are clearly described, written out and agreed upon. You started this business with something specific in mind; don't hastily lose that to an investor.

Lastly, a viable option that may require some groveling is to ask friends and family for their support. Friends and family will know first hand how important this business is to you. If the financial and relationship status allow for "donations" by friends and family, this could be a tremendous asset to your business. If you are having trouble with bank loans, it may be acceptable to set up a loan type agreement between a friend or family member. This allows you to create a financial plan that truly works for you, and may allow for some leeway if payment difficulties arise. Do not take advantage of this possibly good situation. Just because the "bank" is someone you know or are related to, payments made on time and of the agreed amount is still crucial.

One way to raise money for your concept or invention is to scour the trade journals for folks in the industry such as consultants, who have boatloads of contacts and may have a perfect corporate partner who needs what you have. Trade Journals have all sorts of interesting tidbits, often in stories you see quotes from Investment Bankers on something they have funded. Call them. Check the online Ezines in your industry too.

Often there are classified ads in the back of Trade Journals with others looking for monies, sometimes you can contact them and share leads, as maybe a dead end lead for you is just what they want or vise versa. With a stack of Trade Journals and a sharp mind you can think of all sorts of obvious connections to make and each contact can lead you to someone else.

Just be careful not to give away too much of your secret up front. Have non-disclosure agreements ready and use them. Need Ventura Capital for Your Concept; Scour Trade Journals. Need Corporate Partners same thing. Looking for a loan; there are specialists in every industry. Read the Trade Journals and do it with a “private eye” mentality and think about how each contact might help you and how your association might help them. It works.

Recently I met a gentleman out hunting for capital and he dismissed this idea completely. Since I know a thing or two about the subject rather than arguing with a know-it-all, I was prompted to give you this information for your quest to be the best and get the funding you need. I certainly hope this article is of interest and that is has propelled thought. The goal is simple; to help you in your quest to be the best in 2007. I thank you for reading my many articles on diverse subjects, which interest you.

I’m often asked: what is the best way to finance a new business venture. This question is usually followed by "So, do you ever invest in new business ventures?"

The answers, respectively, are: 1. there is no "best" way to fund a new business; and 2. I do invest in new business ventures, but darn it I can’t today because I left my checkbook in my other suit.

The truth is there are a variety of ways to finance a new business and which way is best for you depends totally on your product, your market, your financial requirements, your burn rate, and most importantly, your personal and financial situation.

So with that in mind, here are a few of the most common ways to finance a new business without hitting old Tim up for a loan. Keep in mind that all methods have pros and cons and some (or most) may not work for your specific situation. No matter what financing method you choose thoroughly investigate the ups and downs and don’t jump in with both feet until you’re sure you’ll land on solid ground.

Savings and Investments

The first source you should consider tapping is your own savings and investments. I’m a huge fan of self-financing when it comes to business because it doesn’t make you responsible to others should the business fail. The bad thing is that it if things do go under, it will be your money that goes down with the ship. If you’re not willing to risk your own capital you certainly shouldn’t be willing to risk anyone else’s.

Friends and Family

After tapping their own savings and investments, many entrepreneurs turn to friends and family for help. This works well for some, but here’s the creed I live by: NEVER borrow money from anyone you have to eat Thanksgiving dinner with. Nothing causes tension in a family like lending money that is never paid back. And notice I say "lending money" rather than investing money. Venture capitalists invest money. Your relatives lend you money. They will expect it back someday even if they say they won’t. Remember, when a loved one invests in your business they are emotionally investing in you. It would be tough to tell mom and dad that their favorite son lost their life savings because his business went down the drain.

Credit Cards

I financed my first business on credit cards, which was an incredibly stupid thing to do given the fact that my business could have failed and left me with thousands of dollars in credit card debt that would have taken until the year 2099 to pay off. It worked out in the end for me, but if you decide to finance your business on plastic keep in mind that you will be paying extremely high interest rates on the money you’ve borrowed and unless you hit it big you will be paying for that money for many years to come.

Mortgage The Farm

Bank loans are next to impossible to get if you don’t have collateral and a track record of business success, which is why many entrepreneurs use the equity in their homes to finance their business after being turned down for a bank loan. While this makes more sense than building a business on a deck of credit cards, the financial risks are no less abundant. You must pay this money back whether your business succeeds or not, but it is a good source of low interest money to get you started and the interest may be tax deductible (check with your accountant to make sure).

Angel Investors

An angel investor is typically a wealthy individual who invests in start up ventures for a share of the ownership. Angel investors are usually the first formal investors in a business and provide the seed money to get the business up and running. Some angel investors will write you a check and leave you alone to run your business while others consider their investment a license to "help you" manage and make decisions. If you do accept angel money make sure the terms are clearly defined on both sides. Angel money always comes with strings. Make sure you know whether those strings come in the form of a bow or a noose before you accept an angel’s check.

Venture Capitalists

Venture capitalists are to angel investors as pit bulls are to Chihuahuas. That’s not to say all VC are big, bad dogs, but they do have powerful jaws that can chew up your business and spit it out if things don’t go their way. VC money doesn’t come with strings, it comes with chains and locks and lots of legal documents. VC always have the upper hand in any deal they invest in. That’s just how it works and that’s the price you pay to get access to VC money.

If your business gets to the level that VC money becomes a viable option, don’t jump at the first bone a VC dangles before your eyes. If one VC likes your idea, others will, too. Present to multiple VC and carefully consider each offer before you accept the check.

Just remember, no matter how you finance your business, use the money wisely. Don’t buy $1,500 plasma monitors and $1,000 Hermann Miller chairs.

Have a very clear plan of how the money will be used and how it will be paid back.

And remember this, the more you can shoestring the business, but more of the business you will own in the end.

Finance for business can be obtained through a number of different sources.

Let's review some of those channels to help you decide what's right for your business needs:

Grants

There are over 930 different EU and UK grants and loans available from over 100 issuing bodies. This is the cheapest form of finance and an important part of the funding package that companies and individuals need. We can help you find your way through this maze.

Technology

 

 

• Micro Projects: 50% of eligible costs up to £20,000
• Research project: For a technical and feasibility study of an innovative idea for new technology 60% of costs up to a grant of £75,000.
• Development project: For development up to pre production 35% of costs up to a grant of £200,000
• Developing an innovative idea: valuable for small companies and individuals at the start of a technical project: 75% of costs of hiring a mentor and consultants.

Export

 

To start exporting or moving into new markets grants of 50% of costs up to £20,000 each.

Training and Education

Knowledge Transfer Partnerships, Achieving Best Practice in Your Business, Investors in People

Modern Apprenticeships

New Deal for various grants.

Environment

 

BOC Foundation for the Environment: 25% to 50% of Project cost, typically £20,000 to £100,000

 

Clean up Fund: Emission reducing equipment up to 75% of cost

Community Chest Fund: Up to £25,000 for projects near active SITA sites

High Impact Fund: £150,000+ for larger projects near SITA sites

 

Assisted Areas

 

Regional assistance grants of between 10 and 35% for capital expenditure in less favoured areas of the UK.

 

Loans

Loans are an excellent source of finance if you have suitable security to borrow against or a reliable earnings stream. This needs to be planned and presented well to obtain funds.

Credit cards

 

Provides up to 56 days free credit if you play the game!

Overdraft

Banks are surprisingly supportive when presented with a well thought through plan and competent management.

Bank Loans

Lenders tend to look for a good business plan and security. Typically the loan is approved by a centralised back office function rather than the person you meet. Terms and rates depend upon the risk. Repayments can be very flexible to meet your specific needs.

Mortgages

These can include flexible repayment terms to meet your business needs. This can even be incorporated into your overdraft finance so that you have one flexible account for both personal/ business mortgages and overdraft

Small Firms Loan Guarantee Scheme

Up to two years trading: Up to £100,000

Over two years trading: Up to £250,000

However these are difficult to obtain and are a loan of last resort.

Export Guarantee Scheme

This is government backed insurance against appropriate export documentation.

Mezzanine

This is a halfway house between loan and equity. It can be an innovative way of raising funds for the more established business. Mostly for expansion capital.

 

Equity

This is not as easy as the papers would have you know. Only 1% of business plans received by Venture Capital Funds are successful. However, a good business proposition consisting of a strong demand for the product or service, management track record and a sound financial plan will enhance the chance of success.

Business Angels

 

These are high net worth individuals who are successful businessmen looking for investment opportunities. They can provide both time expertise and money. Typical investment size is £25,000 to £250,000 but can go as high as £2m for the right opportunity. Exit within 3-5 years.

Venture Capital

These are investment funds seeking high rates of return. However typically investments are over a million pounds. Some funds are targeted at lower amounts depending upon the sector and region. These funds are looking for exponential capital growth over 3-5 years.

 

Asset backed finance

This can cover machinery, sales invoices even sales orders. It can be a very flexible source of finance to the growing business

Leasing

 

This will cover your capital expenditure and spread the cost over a three to five year period. It is particularly useful if you do not have taxable profits to maximise your capital allowances.

Sale and leaseback of a property you own is another good source of funds.

Factoring

Factoring offers a sales ledger administration and debt collection service. Up to 95% of an approved sales invoice is paid within 48 hours, quicker if required. Credit protection is also available to protect against a bad debt. The Factor will own and place a first charge over the book debts and they might also take other charges, depending upon the strength of the financial information.

Invoice discounting

Invoice Discounting can be Confidential or Disclosed; it depends upon the strength of the financial information. The service is the same as Factoring, except that the sales ledger administration and the debt collection is the responsibility of the client and not the Factor. Pre payment of the approved sales invoice is still up to 95% and the factor will still have a first charge on the book debt and therefore own the debt. This service can also have credit protection cover. All sales invoices need to be for a business to business debt, and some proof of delivery is generally required.

Trade Finance

This is funding provided against stock purchases, signed contracts and orders whereby the funder will prepay a certain percentage of the value

Pension fund

It may be possible to use your pension funds for a loan back to the business

 

Business Relationship Funding

This is another source of funds that can be overlooked. It may be possible to introduce potential alliances to add value to both parties. It may produce an ultimate exit route in the medium to long term.

• Joint Ventures: Requires a legal agreement embodying the deal and another company
• Partnerships: Two companies collaborate with possible funding.
• Joint working relationships: These are an informal partnership which may be more project specific where the parties can share resources.
• Agencies: These can be geographical or product specific and generally incorporates a payment for the right to the agency.
• Distributors: Very like an agency but may not necessarily involve up front payment.
• Alliances: These do not require a separate company and can be embodied by a legal agreement to work together.
• Trade investors: Otherwise known as Corporate Partnering. This can be a good way to involve a much larger company in the business with a view to possible trade sale further down the line.
• Associates: This can be a loose arrangement with no fundamental commitments either way, rather like a preferred supplier.
• Equity Swop: Two companies exchange shares to a similar value to develop both businesses.
• Franchises: This can allow the business to grow without further direct investment.
• Licensing: This involves licensing a product or service to enable others to sell it. This requires you to own the intellectual property.

In recent times, aspiring entrepreneurs have seen the benefits of tapping into an angel investor to get the capital they need. This is because of the numerous benefits that they can get out of the funding and the managerial expertise that angel investors provide them. As a result of the demand for angel investors, some companies have started to provide services to aspiring entrepreneurs in the form of assistance in helping them find and meet with angel investors.

However, some of these companies charge very high fees without the assurance that a deal would be closed with an angel investor. Given this, there are times when an entrepreneur looking for capital ends up spending thousands of dollars on a "wild goose chase" for an angel investor through these companies. The good news is that aspiring entrepreneurs need not spend an enormous amount of money because finding an angel investor can become a fairly easy and "free" process.

Some tips on finding an angel investor

Before beginning your search for an angel investor, one of the most important initial steps that you need to take is to know exactly what you are looking for regarding the type of angel investor you want to deal with and how much you need. This would involve concucting research on some angel investors, including looking at their experience, their holdings and their investment profile. After doing this, you can now begin your search for angel investors.

As a rule of thumb, you should try to look for an angel investor who is based in your area because they usually want to invest in a business that they can monitor from a "safe distance." One of the best sources for leads for angel investors are the networks that businesspeople belong to like trade and business organizations. Given this, you should try to gain membership to such organizations so that you can have access to a network that could help you find an angel investor. Lastly, you can always go to the Internet, which can give you several leads on angel investors on top of the information on angel investors that you would also need for your search.

Looking for an angel investor need not be a very expensive process. This is because, given the good sources of information like the Internet and networks that entrepreneurs can tap, you can search for the right angel investor for you business on your own. You don't have to pay exorbitant amounts of money for companies to do the search for you.

For fresh graduates or for employees who want to start their own businesses, one of the hardest things to do is to get the capital that they need to do so. This is because most of the traditional sources of loans or funding are apprehensive in providing funds for start-up businesses. Given this, most of them opt to shelve their business idea until they get the money they need. Some opt to sell equity, and some of them borrow the money from relatives and friends. However, people who want to go into business for themselves need not wait until they get the money from these sources because there is a good source of capital that they can tap into. All they need is a good idea and a strong business plan. This source is an angel investor.

What are angel investors?

Angel investors are either individuals or companies who put in money into startup businesses. However, their role in the business is not limited to being an investor because angel investors take an active role in the management of the business as a means of protecting their investment, which is why angel investors are usually businessmen themselves who are astute in handling businesses. There are three ways by which an angel investor can provide funds for a business. One of these is by providing money through a promissory note or a loan, which can be converted into an equity position in the company after the launching phase of the company. Usually, the investor would take about 15 to 30 percent equity in the company, which is enough to gain a set in the board.

The second way angel investors provide funds is through a cumulative convertible preferred stock option, wherein the investor defers the dividend payments he would receive from his stock, while he holds a seat in the board. The third way is for an investor to get an equity position right away when they put in their investment. In this set-up, they have an option to bring in one or two of his associates to help in the management of the business.

One good source of money that aspiring entrepreneurs can tap is an angel investor, which can provide them with the capital they need to launch their business. The good news is that apart from being able to get the money they need from these investors, they can also gain a number of benefits from the managerial expertise of the investor.

Many entrepreneurs see themselves someday as becoming venture capitalists because they think the venture capitalists are the people with all the money. Indeed, over time many of them have made a huge killing and many have lost a small fortune. It is amazing that so many people look up to the venture capitalists and of those in the know often referred to them as vulture capitalists, because really that's what they are.

But he with the gold makes the rules and that is the game. If you want their venture capital money that you have to sell your soul and go along with their game plan, which is probably a return on investment of 10 times their initial first round of funding within three years.

If not the company will be salt and all its assets and they're cashing out, whether or not they made any money. Why do they play the game so tight, because it is a disciplined game and that's the only way they have found it works. If you have fallen in love with your business plan and your entrepreneurial dream did venture capital is not the way to go.

If however you just want to make money and you really don't care and you have a really good idea at the right time in the marketplace that you might find excellent company with a venture capitalist.

Once you do two or three deals this way and become what they call a serial entrepreneur then perhaps you are ready to play on their side of the fence and become a cheesy venture capitalist. And I mean that in the most sincere way. Truly I do, I just love them. Consider all this in 2006.

The “Money Pitch” begins with the presentation you make when you send investor groups your business plan. Your business plan should be detailed, but concise, and in addition to containing an Executive Summary it should also state your financials, preferably audited financials.

Your Business Plan should also contain a detailed “use of proceeds” section. In this section you should state the exact amount of funding you are seeking and break it down so investors can see that you put thought and research into how you arrived at the total amount you are seeking. I have reviewed Business Plans from many clients and development stage companies. More than a few were poor estimates that were not well thought out. The amount you are seeking should also directly relate to that section in your business plan that shows your projected financials.

Investors will not want to fund your company $3,000,000 (for example) if in 2 or 3 years you can’t at least generate a multiple of that amount in gross revenues and achieve some sort of significant net profit. This is important because the investor group needs to consider its Exit Strategy even if that is 3 to 5 years after they fund your company.

Let’s break this down so you can understand the thought process of a venture capital or private equity firm that is going to make a funding decision regarding your company. By understanding the goal they want to achieve on their investment this will help you in preparing your business plan, obtaining the funding you need and achieving your goal.

Let’s say you are looking to raise $3,000,000 for expansion of your specialty hardware company and will give up 40% ownership in your company. The venture capital or private equity firm is thinking, we are investing $3,000,000 and are looking to get back $6,000,000 or more in 3 to 5 years. Now, if you can convince them that your company can use that $3,000,000 to increase its current $500,000 net profit to $2,000,000 then you probably have a good chance of getting your funding.

Here’s the reasoning. If the private equity firm owns 40% of your company and you go public or do a “reverse merger”, then using a low price-to-earnings ratio of 10 would mean your company would be worth $20,000,000. This is 10 times your $2,000,000 net profit and gives your company a $20,000,000 market capitalization. So if the venture capital or private equity firm owns 40% of your $20,000,000 company they can sell their stock for $8,000,000 and be very happy with the profit they have made.

Now let’s take another example. Let’s say instead of going public, you decide to sell your specialty hardware company to another much larger hardware company. The larger hardware company may only pay one times your gross earnings, or a little more depending on patents, technology, equipment and how strategic the acquisition of your specialty hardware company may be to them. So if your company has gross revenues of $8,000,000 and a larger company will buy you out for $10,000,000 then the private equity firm would get back 40% of that amount or $4,000,000 and still be happy with its profit.

Now that you can see the minimum end result that private equity firms are looking for, you just have to make sure that your use of funds can achieve the end results they are looking for so that you can obtain your funding and execute your business plan.

Growth – real growth – depends on innovation. Oh, sure, a big acquisition can inflate a company's top line, but it's hardly fair to call this growth; agglomeration would be a better word. Deal making of the sort that was used to jack up revenues at companies such as Tyco, Vivendi, HealthSouth, and DaimlerChrysler is unlikely to produce above-average growth for more than a few years at a time. Study a company that has delivered strong revenue growth over a decade or more, and you're likely to find evidence of world-class innovation. Maybe the company invented a new industry structure, like Microsoft did when it "de-verticalized" the computer industry. Maybe the firm pioneered a bold new business model, like Costco did with its upscale warehouse stores. Or maybe it hatched a bountiful brood of sleek new products, like Nokia did. Put simply, innovation is the fuel for growth. When a company runs out of innovation, it runs out of growth.

And there's the rub. We live in an age of austerity. Every line of every budget in every company is under perpetual scrutiny. Innovation budgets are no exception. Increasingly, R&D units are required to negotiate their budgets directly with key operating divisions, in hopes of tying their research spending to real-world customer problems. Companies like IBM are sending their R&D professionals into the field to interact directly with customers. Organizations are subjecting nascent development programs to ever more rigorous screening with the goal of focusing their resources on a few big-win projects. Additionally, companies are training their R&D staffs to think in business terms so the researchers will be better able to decide whether an idea is worth pursuing in the first place.

These efficiency measures are commendable, but they don't go far enough. A company can't outgrow its competitors unless it can out-innovate them. And in these austere times, that is only going to happen if a company is capable of substantially raising the yield on its innovation investments. Achieving such a step function improvement requires more than just a bit of R&D belt tightening. It demands a fundamentally new way of thinking about innovation productivity, as well as a set of strategies that have the power to deliver a whole lot more bang for every innovation buck.

To dramatically improve innovation yields, companies must believe that innovation outputs (new processes, products, services, and business models) are less than perfectly correlated with innovation inputs (cash and talent). This assumption is more unorthodox than it first appears. When we recently asked more than 500 senior and midlevel managers in large U.S. companies to identify the biggest barriers to innovation in their respective organizations, the number one response was "short-term focus" followed by "lack of time and resources." In this view, innovation is highly dependent on investment, and it is senior management's presumed obsession with near-term earnings that most limits a company's innovation productivity. We think this view is wrong.

"Funding Growth in an Age of Austerity", Gary Hamel and Gary Getz, Harvard Business Review, July-August 2004. Visit CJPS-Enterprises for more information.

Execution the discipline of getting things done is desired by all businesses. However the reality is that the failure to execute happens to 70% to 90% of most companies according to one recent study. Another report in Fortune Magazine revealed that 7 out of 10 CEO's who fail, do so because of bad execution and not bad strategy. Finally, another study of Fortune 1000 firms suggested that these companies' directors believed that they had the right strategy, but only 14% thought the implementation of those strategies was going well. (Source: Business Balls)

As a business coach in talking with small business owners to owners of much larger companies, I can personally attest that failure to execute the strategic plan continues to frustrate these executives. For execution is a symptom of a much deeper problem, the lack of personal accountability or as some would say "What's in it for me?"

Until a company unites a disciplined process of personal accountability that ensures the employees are consistently executing the strategic plan, the plan will continue to languish and die on the vine only to be replanted with another and another and another.

Goal achievement along with personal development is the answer to strategic plan execution. Most people are asked to set and achieve organizational goals. Yet, how many of these same individuals set and achieve their own personal goals. And more importantly, when was Goal Setting and Goal Achievement taught to these very same individuals? Answer, probably never.

The failure to achieve execution is because your people have been set up to fail before the first goal was committed to writing within your strategic plan. Consistent goal setting and goal achievement is a learned and developed skill. When the skill becomes automatic, the individual's own personal accountability becomes likewise. For continued goal achievement starts these individuals on a road where they receive success because they believe in success.

If you want your organization to realize a positive return on investment for those thousands of dollars that you have spent on a strategic plan, then adopt a proven goal setting and goal achievement process that inherently builds personal accountability. You will be truly amazed by the results.

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