Obtaining Funding: The Basics

Funding can make or break your business. Start-up funding can get your business off the ground, and ongoing funding can keep your business afloat during tough economic times. Before you reach out to investors or banks to ask for cash, follow the steps below to make sure that your business is prepared to face potential investors.

First, incorporate as an S-Corp, C-Corp or LLC. Unlike sole proprietorships or partnerships, these forms of organization allow equity to be shared among multiple investors. Hire an experienced business lawyer to help you determine the proper structure for your company and obtain proper documentation and registration.

Second, register your intellectual property. Obtain trademarks and patents for any intellectual property that your company has developed, including proprietary trade names and inventions. Again, seek the aid of a qualified lawyer to help navigate the trademark process.

Third, clean up your financials. Prepare an easy-to-read set of historical financials that includes all relevant detail and backup data. Make sure that your company’s financial data is well-organized and easy to sort through in case investors ask questions. Prepare a set of financial projections that are reasonable and grounded in fact. Make sure that you can back up the financial projections with market data or company history.

Fourth, get the right people on board. Hire employees that have relevant backgrounds for your company’s industry and product. This is especially important in very young companies; when investors look at early stage companies that have little operating history, they are often investing on the strength of the management team, not on the historical performance of the business.

Fifth, create a professional website and online presence. Potential investors will turn to the internet to research your company, and you want to make sure that your web page puts your company’s best foot forward. Add the company’s products and management team. Highlight any key customers or recent accomplishments. Keep the website up-to-date and professional at all times.

Sixth, keep an updated business plan. Business plans change over time based on business performance and market dynamics. Update your business plan to reflect these changes so that you are ready to discuss your company’s operations with investors at any time.

While the six tips above are a must for any business seeking funding, nothing “wows” investors like a highly-successful and well-regarded business. Be sure to continue to build your business as you incorporate these funding tips into your company’s goals.