Prepare Your Start-Up

By failing to prepare you are preparing to fail.
-Benjamin Franklin-

Investors (you, bankers, or anyone else who lend the money) want to be sure that their investment makes good financial sense - that is, the risks and rewards are acceptable, the investment will help the business grow, and the investment will pay off in reasonable length of time. This is tough enough for any business, but especially tough for a start-up. (Turnarounds are much like start-ups so if you are seeking financing to turn a failing business around, you will face the same problems).

The greatest single problem is finding information to support your financing proposal. This is an area where the Internet (Net) is unavailable. Throughout this, we will refer to web sites that help you gain the results you seek. If you are not on the Net, you are making a major mistake, although you can still access the information you need, the work will be harder than it has to be.

Start-ups need business plans. They need them even more than going businesses do, since there is no track record for the investor to rely on. Your business plan helps you to model your business concept, test ideas, predict costs, play "what if", and examine different scenarios and assumptions. More than that, it helps the investor understand what you have in mind and why your business will be successful. While a financial model (you projected balance sheet, income statements, and cash-flow budgets) is only a model, it is a lot better than unsubstantiated hope. Don't forget, you are the biggest investor in your start-up: your time, energy assets, and dreams are on the line. The financial statements will help you make better business decisions.