How do you get investors?

JuggoPop · 10-09-2003, 10:41 PM

How do you get investors to help start a business?

John Scott · 10-09-2003, 10:49 PM

If you have a detailed business plan - and I do mean detailed - you can often get investors to invest in your business with nothing more than a hand shake.

My first business venture was a philosophical magazine: "The Neo-Classicist Review." It was a monthly collection of conservative essays on individual sovereignty, etc.

I just asked friends with money, and who shared the same views, to invest. They did.

Montgomery Ward was started like that. Microsoft started somewhat like that.

I think if you have a legit business plan, finding investors shouldn't be hard.

JuggoPop · 10-09-2003, 10:56 PM

What would you say are KEY in a quality business plan?

(I am trying to open a full-scale web design business in my home town and have never actually formed a busness plan for others to read or be intrested in.)

John Scott · 10-09-2003, 11:06 PM

Numbers. Stats are everything.

Web design is a hard one.

If you were going to start something like ServiceMagic ( www.servicemagic.com ), which started out with $16 million (second round of financing added $29 million to that) in seed financing, you would want to have market research showing:

How many contractors in the US & Canada
What percentage can be expected to participate
How much you plan to spend per year on promotion
How you intend to promote
What competition there is for the market
What seperates you from the competition
When do you expect to see blue ink
How much blue ink
ETC.

You might want to leave out details that could create doubt. Like, in the case of ServiceMagic, the fact that Handyman Online went down in flames with the exact same business plan, after burning up $24 million.

JuggoPop · 10-09-2003, 11:23 PM

So something like... (to start with)

How many (major) local business in the state that need/don't have a website
How many local business in the state that have a website that needs updating
Explain our goals in the aspect of developing a advanced chruch network
How many local churches in the state that need/don't have a website
How many local churches in the state that have a website that needs updating
How much we plan to spend per year on promotion
How we intend to promote
What competition there is for the market
What seperates us from the competition (we smash then in this arena! LOL...)
When do we expect to see blue ink
How much blue ink
ETC.

What about expenses like office space, startup costs, supplies...
should this all be listed out item by item or as a lump total...???
What is the normal layout for this section of a business plan?

What about employee wages?
I'm guessing any money coming in or out during startup should be accounted for...

and do you know where I could see some examples of great business plans?

Quote:

What percentage can be expected to participate

Now, there is another big question of mine... as I have never invested into another company nor asked anyone to invest in me...

I don't know what common standards are for this..
and I have no clue as to how long before an investor expects to see returns...

thanks for your help John.

John Scott · 10-09-2003, 11:39 PM

Quote:

What about expenses like office space, startup costs, supplies...
should this all be listed out item by item or as a lump total...???
What is the normal layout for this section of a business plan?

What about employee wages?
I'm guessing any money coming in or out during startup should be accounted for...

Investors usually want everything in detail. Break it down, including office supplies, phone expenses, etc.

Quote:

and do you know where I could see some examples of great business plans?

Sorry about that - I don't know of any online. I'm sure there are some, but I don't know of the link off hand.

Quote:

I don't know what common standards are for this..
and I have no clue as to how long before an investor expects to see returns...

Just estimate everything conservatively, and still show a profit within 6 months. Can't go wrong there.

hatchet · 10-11-2003, 11:25 PM

Here's where I went to get information for starting my construction company..
http://www.toolkit.cch.com/
Free downloads of all the business startup stuff. And gives a general idea on other marketing and business plan writing.

JuggoPop · 10-11-2003, 11:25 PM

Quote:

Originally Posted by hatchet

Here's where I went to get information for starting my construction company..
http://www.toolkit.cch.com/
Free downloads of all the business startup stuff. And gives a general idea on other marketing and business plan writing.

Great!!! Thanks!

hatchet · 10-11-2003, 11:31 PM

If you search for .. nevermind..
here you go
http://www.google.com/search?sourcei...+business+soho

some good resources in there.

Jazzee · 10-12-2003, 07:24 AM

Don't know how good this is, but here are some business plan examples.

http://www.businessplans.org/mootcorp.html

altyfc · 10-13-2003, 09:25 AM

This is also a helpful guide:
http://www.sba.gov/starting_business...ing/basic.html

Aaron

John Scott · 10-13-2003, 10:55 PM

Superb link, Aaron.

Quote:

Elements of a Business Plan

1. Cover sheet
2. Statement of purpose 3. Table of contents
I. The Business
A. Description of business
B. Marketing
C. Competition
D. Operating procedures
E. Personnel
F. Business insurance
II. Financial Data
A. Loan applications
B. Capital equipment and supply list
C. Balance sheet
D. Breakeven analysis
E. Pro-forma income projections (profit & loss statements)
Three-year summary
Detail by month, first year
Detail by quarters, second and third years
Assumptions upon which projections were based
F. Pro-forma cash flow
III. Supporting Documents
Tax returns of principals for last three years Personal financial statement (all banks have these forms)
For franchised businesses, a copy of franchise contract and all supporting documents provided by the franchisor
Copy of proposed lease or purchase agreement for building space
Copy of licenses and other legal documents
Copy of resumes of all principals
Copies of letters of intent from suppliers, etc.

TerrelShumway · 10-15-2003, 06:17 PM

Before you go after investors, think a lot about why you even need outside capital. For a solo or SOHO business, the shoestring is a very good way to go. Even Subway was started with an initital capital investment of $1000.

VC and too-rapid growth is the best way to kill a good idea. Unless you have a very strong vision of what you want, too-much money will only distract you.

If you do need money, start with your family/immediate network before you go to professional lenders. (You still need the business plan even for personal loans.)

-- Terrel

p.s.
Terri Lonier of http://workingsolo.com/ has some good strategies for starting small. If you are interested in the business gym, talk to me first.

eyelfixit · 10-15-2003, 09:17 PM

One thing you forgot to add is potential obsticales and a marketing strategies. these are also crucial.

cgo · 06-10-2004, 06:45 PM

all of those are great comments. However, any serious business that is really trying to make a quick and strong entrance into the market is going to need investment money.

John Scott · 11-18-2005, 02:03 PM

Quote:

Originally Posted by JuggoPop

How do you get investors to help start a business?

Adding to my previous reply (over two years ago?!), the #1 way to get investors to invest in a business is for the business to actually be making money. People see that, and want to throw money at you even if you don't have a business plan.