The task of raising money for a business is not as difficult as   
   most people seem to think. This is especially true when you have   
   an idea that can make you and your backers rich. Actually,   
   there's more money available for new business ventures than there   
   are good business ideas.   
      
   A very important rule of the game to learn: Any time you want to   
   raise money, your first move should be to put together a proper   
   prospectus.   
      
   This prospectus should include a resume of your background, your   
   education, training, experience and any other personal qualities   
   that might be counted as an asset to your potential success. It's   
   also a good idea to list the various loans you've had in the   
   past, what they were for, and your history in paying them off.   
      
   You'll have to explain in detail how the money you want is going   
   to be used. If it's for an existing business, you'll need a   
   profit and loss record for at least the preceding six months, and   
   a plan showing how this additional money will produce greater   
   profits. If it's a new business, you'll have to show your   
   proposed business plan, your marketing research and projected   
   costs, as well as anticipated income figures, with a summary for   
   each year, over at least a three year period.   
      
   It'll be advantageous to you to base your cost estimates high,   
   and your income projections on minimal returns. This will enable   
   you to "ride through" those extreme "ups and downs" inherent in   
   any beginning business. You should also describe what makes your   
   business unique---how it differs form your competition and the   
   opportunities for expansion or secondary products.   
      
   This prospectus will have to state precisely what you're offering   
   the investor in  return for the use of his money. He'll want to   
   know the percentage of interest you're willing to pay, and   
   whether monthly, quarterly or on an annual basis. Are you   
   offering a certain percentage of the profits? A percentage of the   
   business? A seat on your board of directories?   
      
   An investor uses his money to make more money. He wants to make   
   as much as he can, regardless whether it's short term or long   
   term deal. In order to attract him, interest him, and persuade   
   him to "put up" the money you need, you'll not only have to offer   
   him an opportunity for big profits, but you'll have to spell it   
   out in detail, and further, back up your claims with proof from   
   your marketing research.   
      
   Venture investors are usually quite familiar with "high risk"   
   proposals, yet they all want to minimize that risk as much as   
   possible. Therefore, your prospectus should include a listing of   
   your business and personal assets with documentation---usually   
   copies of your tax returns for the past three years or more. Your   
   prospective investor may not know anything about you or your   
   business, but if he wants to know, he can pick up his telephone   
   and know everything there is to know within 24 hours. The point   
   here is, don't ever try to "con" a potential investor. Be honest   
   with him. Lay all the facts on the table for him. In most cases,   
   if you've got a good idea and you've done your homework properly,   
   and "interested investor" will understand your position and offer   
   more help than you dared to ask.   
      
   When you have your prospectus prepared, know how much money you   
   want, exactly how it will be used, and how you intend to repay   
   it, you're ready to start looking for investors.   
      
   As simple as it seems, one of the easiest ways of raising money   
   is by advertising in a newspaper or a national publication   
   featuring such ads. Your ad should state the amount of money you   
   want--always ask for more money than you have room for   
   negotiating. Your ad should also state the type of business   
   involved ( to separate the curious from the truly interested),   
   and the kind of return you're promising on the investment.   
      
   Take a page from the party plan merchandisers. Set up a party and   
   invite your friends over. Explain your business plan, the profit   
   potential, and how much you need. Give them each a copy of your   
   prospectus and ask that they pledge a thousand dollars as a   
   non-participating partner in your business. Check with the   
   current tax regulations. You may be allowed up to 25 partners in   
   Sub Chapter S enterprises, opening the door for anyone to gather   
   a group of friends around himself with something to offer them in   
   return for their assistance in capitalizing his business.   
      
   You can also issue and sell up to $300,000 worth of stock in your   
   company without going through the Federal Trade Commission.   
   You'll need the help of an attorney to do this, however, and of   
   course a good tax accountant as well wouldn't hurt.   
      
   It's always a good idea to have an attorney and an accountant   
   help you make up your business prospectus. As you explain your   
   plan to them, and ask for their advice, casually ask them if   
   they'd mind letting you know of, or steer your way any potential   
   investors they might happen to meet. Do the same with your   
   banker. Give him  a copy of your prospectus and ask him if he'd   
   look it over and offer any suggestions for improving it, and of   
   course, let you know of any potential investors. In either case,   
   it's always a good idea to let them know you're willing to pay a   
   "finder's fee" if you can be directed to the right investor.   
      
   Professional people such as doctors and dentists are known to   
   have a tendency to join occupational investment groups.  The next   
   time you talk with your doctor or dentist, give him a prospectus   
   and explain your plan. He may want to invest on his own or   
   perhaps set up an appointment for you to talk with the manager of   
   his investment group. Either way, you win because when you're   
   looking for money, it's essential that you get the word out as   
   many potential investors as possible.   
      
   Don't overlook the possibilities of the Small Business Investment   
   Companies in your area. Look them up in your telephone book under   
   "Investment Services." These companies exist for the sole purpose   
   of lending money to businesses which they feel have a good chance   
   of making money. In many instances, they trade their help for a   
   small interest in your company.   
      
   Many states have Business Development Commissions whose goal is   
   to assist in the establishment and growth of new businesses. Not   
   only do they offer favorable taxes and business expertise, most   
   also offer money or facilities to help a new business get   
   started. Your Chamber of Commerce is the place to check for   
   further information of this idea.   
      
   Industrial banks are usually much more amenable to making   
   business loans than regular banks, so be sure to check out these   
      
   [continued in next message]   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)