Start & Run an Event-Planning Business. Mardi Foster-Walker

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СКАЧАТЬ more initial capital, it will still be necessary to show potential lenders and investors that you have something more to invest than just your ideas and time.

      Family and friends

      Many small-business ventures start with the generosity of family and friends. Most often this type of financing takes the form of a loan on trust, accepted in good faith, with no collateral required. There is always a danger in mixing business financing with personal relationships, so this option should be approached with careful consideration; the terms and conditions of the loan should be reasonable and negotiated in a businesslike manner. Have a lawyer prepare a legal promissory note that outlines all the terms and conditions.

      Most important, be certain you will be able to pay the money back on time and in full. Before accepting the loan, think about a backup payment plan should the business be unable to repay the debt.

      Financial institutions

      The most logical approach to securing a loan from a financial institution is to select one where you already have a history of responsible financial dealings and an already established relationship with the manager or loans officer.

      Be well prepared when you approach any potential lender. Have a clear, concise, typed, well-presented business plan. Present the lender with your sales and cash flow projections, and explain precisely how much money you want to borrow and why. Be very specific and show how your business can be expected to generate the cash to repay the loan.

      Be prepared to show statements of your personal net worth and what other financial resources you have available to start up your business. If you want to win the confidence of the bank manager or loans officer, be prepared to answer all questions truthfully and candidly.

      It is unlikely that you will be able to secure a bank loan unless you have some tangible assets as security. If you own a home and are willing to mortgage it, or mortgage it further, a lender is more likely to make funds available.

      When you borrow money for your new business, you are personally liable to pay it back. Even if your company is incorporated, the lender will require a personal guarantee from you. If a bank or credit union agrees to grant you a loan, it will usually require you to take out property and liability insurance on your business and a life insurance policy on yourself, naming the bank as beneficiary.

      A financial institution may come up with a variety of reasons for turning down your request for a loan. If you do not succeed at the first lender you try, go to others. Ask why you are being turned down for financing and make adjustments accordingly. Perhaps you need to revamp your business plan or start your business on a smaller scale. You may also want to consider taking out a personal loan. This is sometimes the easiest method for many small-business entrepreneurs to secure financing, especially when the amount needed for start-up is small. To receive a personal loan, you will still need to have collateral and satisfy the bank of your ability to pay. However, you will not need to provide the bank with a business plan or to go into the details of your proposed venture.

      Private investors

      Going into business with someone you know can be difficult; starting a business with someone you don’t know can be impossible and usually comes with stringent conditions. The best source for finding private investors is your accountant. People with money to invest in small start-up ventures often rely on their accountants for advice.

      Expect such investors to be cautious and to attach conditions to the loan. Their approach to lending money to a small business is similar to that of a bank, and you will need to provide them with the same type of information you would provide to a loan officer with any financial institution. Note that private investors seldom invest in a small-business venture unless there is a possibility of a greater than average return on investment.

      Government

      The governments of both the United States and Canada provide financial assistance to small business.

      In the United States, the Small Business Administration (SBA) exists to help small business educationally and financially. You should check your phone book for the office nearest you and see a counselor for current information on funding. You can also call the SBA’s Small Business Answer Desk at 1-800-827-5722.

      In Canada, money for small business comes from a variety of government departments both provincial and federal. Check the small-business development department of your provincial government.

      It should be noted that most government lending is done as “last resort” lending. It often takes the form of loan guarantees rather than direct loans. You may have to prove you were unable to obtain money from other sources. Generally, the government will expect that you have some of your own money invested in the enterprise. There may also be restrictions on the type of businesses that receive funding. Learn what programs are available through the various levels of government.

      Before approaching any government lending department for funds, prepare proper documentation on your business. The rules of preparation and professionalism apply any time you seek either commercial or government financial assistance.

      Many government programs give loans or loan guarantees to incorporated businesses only. Small proprietorships often find themselves ineligible for certain types of government funding. Even if you do strike out, the process of learning what is available is worthwhile. You may not be eligible now, but there may be a time later in your business cycle when your business will qualify, and the time spent will not have been wasted.

      Your Business Plan

      A good business plan is a simple, honest document that completely and precisely describes your experience, your proposed business, and your long-term plans for that business. It does not need to be long or complicated; it should tell a complete story that can be easily understood by a potential lender or investor.

      A business plan is expected to follow a standard format, but it should be tailored to suit the situation. How your business plan is presented is as important as the information it contains. For professional polish, use a 12-point font for the text, double-spaced and printed on standard white paper. Have someone else proofread it and make sure it contains no mistakes or spelling and grammatical errors.

      It should have a separate cover page with the company name, address, telephone and fax numbers, and your name as the person to contact for further information. It should also show the date that the document was prepared. Each section of the plan should have a heading and the pages should be numbered.

      You might want to consider writing a short cover letter offering to provide any additional information that might be required. If you write a cover letter, make sure you have the correct information for your contact.

      A business plan that includes three or four pages of solid information and a cash flow forecast will probably be sufficient for starting up a small special events business. If you have done thorough market research and financial forecasts, you will have all the information necessary to write a business plan.

      Following is a brief discussion of each of the components that go into a business plan.

      Executive summary

      Your business plan should outline the following essential facts regarding your proposed business:

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