Make sure to establish the appropriate time frame for your operating budget. Operating budgets cover a period of time, usually a fiscal year (required for tax purposes), but are most useful is broken down to a monthly or even a weekly basis.
Most businesses will find that a monthly budget is the most useful, as it allows enough time to smooth out some of the bumps, yet is short enough so that if you find something going wrong (r going better than you expected) you can take timely action. Information that is 12 months old can arrive too late to do you much good, especially during the early months of a start-up when reliable patterns haven't been established.
Next, determine how much you really need. Bankers and other investors look with justifiable skepticism at unsubstantiated requests for funds. Try to determine how much you really need as opposed to what you think would be nice to have. What is the least you can get by with? Do you have a compelling argument for more money - in terms of added growth, profits, lessened risk, and so forth?
Your Financing proposal should make clear:
Most businesses will find that a monthly budget is the most useful, as it allows enough time to smooth out some of the bumps, yet is short enough so that if you find something going wrong (r going better than you expected) you can take timely action. Information that is 12 months old can arrive too late to do you much good, especially during the early months of a start-up when reliable patterns haven't been established.
Next, determine how much you really need. Bankers and other investors look with justifiable skepticism at unsubstantiated requests for funds. Try to determine how much you really need as opposed to what you think would be nice to have. What is the least you can get by with? Do you have a compelling argument for more money - in terms of added growth, profits, lessened risk, and so forth?
Your Financing proposal should make clear:
- How much money you want
- What you want it for
- What kind of money you are seeking (debt or equity)
- When you want it
- Why it will make your business better
- How you'll pay it back
- What your contingency plans might be just in case things don't work out
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