Principle 1: Match the product to your specific needs
Most entrepreneurs, when they think about financing, immediately go to
bankers or venture capitalists. But in today’s capital markets, those are only two
of a wide variety of lending alternatives. To sustain your company’s growth,
make sure you get the right financing product(s) for your specific capital needs.
For example, if you go to a bank or commercial lender when you require mezzanine financing, you won’t get the loan because you won’t have the
collateral to support it. If you borrow from a venture capitalist when you could
have used mezzanine financing, you’ll probably give away far more of your
company than is necessary.
To pick the financing products that truly meet your needs, take the steps below.
Do the research
Take the time to learn about the many different types of financing available in
today’s capital markets. Identify the type of lender that fits your industry, your
type of company and your financing needs, and focus your efforts in that area.
Clarify your needs
Talk with your CFO, your accounting firm, your lawyer and anyone else who
plays a key role in planning the growth of your business. Be crystal clear about
your financing needs before you approach the capital markets.
Get professional help
Raising growth capital could be the most important decision you ever make in
your company. Hiring an experienced professional who can help you to craft
your business plan and find the right type of financing will pay for itself many
times over. If you insist on doing the plan yourself, at least have an outside
party review and challenge your assumptions. The key to successful financing is
to select your financing products with the same care and precision with which
you hire employees or buy raw materials for your operating business.
READ MORE (Finance - Six principles for financing growth) >>
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