Money-making Idea (raising capital)

What you need most to get a new business off the ground is a talent for raising capital. Even if your idea is brilliant, no backer will give you a dime until you have sunk in most of your own savings.

So, the smart entrepreneur start with as much of his own capital as possible, using all his sources of credit. If necessary, he will remortgage his house. By maximizing his own stake in the business, he will impress other potential investors with his commitment. He also will retain tighter control of his enterprise.

When entrepreneurs need outside money, begin by soliciting friends and relatives-and then go on to friends of friends and relatives. Close relatives usually are more willing than distant investors to wait for the profits to start rolling in.

Try to get his or her money as a loan rather than as an investment in return for a piece of your company. After you have approached friends and family, the best way to get names of potential investors you don't know is to ask accountant, bankers, lawyers, brokers and other business owners. They often know who has money to invest or lend. Local business groups like the chamber of commerce can provide more leads.

Once you have exhausted your individual financing sources, it is time to approach the institution. If you need less than hundred thousand, the best sources are the bank, savings and loan, commercial finance companies, the small Business administration and business development companies.

When you have to go to those outside capitalist and bankers for money, you may be rather pleasantly surprised. Though real interest rates are high, money to finance promising new businesses is fairly plentiful. Banks are making loans to small business again. Professional venture capitalists are loaded with cash, and they even complain they cannot find enough worthy enterprises to assist.

If you need help putting together your plan to start a small business, ask an accountant. Expect to pay your professional adviser. He may be able to show you how to use potential customers and suppliers as sources of financing and how to cut cost by leasing, rather than buying , equipment. So hiring a professional probably will be a sensible investment.

To increase your chances of raising money, start with the right source. If you want a bank loan (info), for example, call ahead to inquire whether the bank does the kind of lending you need. then find out what your potential backers want-and deliver it. Ask a banker what it will take for him or her to lend you money. If you meet his or her standards, it will be hard for him to say no. Finally, if you are rejected, find out why.

The way you can approach your next source with a better pitch.