Finding Funding
By the Family Entertainment Center
Page 1, 2
SBA
The Small Business Administration offers a wide range of products and
services to help the small business owner/start-up. Programs are as numerous
and various as there are business opportunities and this article is not
able to review and qualify them all. However our experience confirms that
there have been projects funded under an SBA program with an availability
of funds anywhere from $25,000 and up. In many cases, an SBA loan could be
used as a first-round or seed funding to get you to a point where a traditional
funder would be interested in helping with the balance of your funding
needs.
Each program and amount of support is dependent upon various factors
and is recommended that you visit their web
site or speak with a representative to get a better idea of what could
be available.
Circle of Influence
You take your idea and your business plan to your family and friends
and sell them on yourself and the investment opportunity. You would use
this initial investment as you would a loan from the SBA and leverage
those funds as a first-round or seed funding to acquire the balance of
your funding.
In taking this route you may
find that you will need to a) dilute your ownership in exchange for
their hard-earned cash, and/or b) offer them a first-return out of
your operating profits (after the bank takes his, of course) to make
the "promised" quick repayment to them. In
many instances we find that this option offers greater patience and understanding
then your typical banker, however it can also fray relationships with
friends and loved ones as the returns you expected are slow in coming.
Lease Options
There are companies out there that will provide you with lease options
for your Capital expenses (rides, activities, etc). However, our experience
indicates that for a start-up business, these companies will provide a
maximum of $25,000 to $30,000 if you can jump through the same hoops your
banker makes you jump through. Meaning, credit checks, payment history,
personal and existing business financial's (if applicable) etc.
Not to discourage you, but these are the realities
of finding funding. Take these two steps to ensure your success;
1) Much of this can be overcome by doing your market research on
the front end, is this is viable project? Once that research clearly
indicates that this IS a viable project, then the next thing you
should do is prepare an executive summary and make appointments
to see as many potential funders as possible.
2) Start with YOUR banker, they know you best. Ask them for some
advice and take your executive summary with you. Give them a clear
overview of your idea and lay it out on the table. Tell them exactly
what you have in personal equity, financial relationships with friends
and family and what you could bring to the table in terms of cash
and/or equity.
Based on your current/existing banking relationship, your
brief executive summary, and the cash/equity stand you have to
offer, ask them what the realities of securing additional
funding would be, and at what amounts. Of course before dong this
you will want to have some knowledgeable idea of what the total
package will cost.
Letting the Secret Out |
You may be thinking that this idea is so good, everyone
you present it to will want to steal it from you. From your
banker to your lawyer to the guy at the Pharmacy, everyone
will be off and running with your idea - so you can't present
it until you have a completed plan and are ready to go.
But how do you know at that point whether or not all the
hard work you put into your plan is actually able to get
funding? Professional people operate under a code of ethics
that prohibits them from acting on business plans and/or
ideas they may come across.
It is recommended that you take your project idea in the
early stages and speak with bank lenders in hard, realistic
terms of what they can and can not do for you. This is very
tough for most people because you may end up hearing what
you don't want to hear. But hearing it up front will save
you hours of work, heartache and give you specific direction
so that when you get at it you are moving down the right path. |
A best option for preparing to meet with potential funders may
be our exclusive fun center business plan template. Quickly determine
your start-up costs and prepare an executive summary along with completed
financials, click here for
more info.
Don't be put off by bankers who insist you have a completed
business plan before they will meet with you. Be prepared, know in
gross terms what the project may costs, ie; $250,000 to $350,000 and
then tell them that you need to get a reality check on the availability
of funds based on your equity. If not entirely from them, then what programs
or other resources may be available that the bank and others may be connected
with.
Armed with a little bit of industry knowledge and some local market data
you should be able to get a banker, somewhere to help give you a reality
check on your ability to find the funding you require. With this, the
time and dollars you spend on pulling together your project planning are
well spent. Good luck and happy hunting! |
