You work 50 hours a week in a job you hate, your friends and family put major demands on your time, and you still have to squeeze in time for the gym. But you've got this great idea for a business. If only you had time to write a business plan, put together a proposal package and meet with investors, you could lose the boring job and live up to your true potential. Sound like your life? Relax. The Internet is here, and it can help you move toward your goals.
The Net is quickly becoming a vast source of capital for the less-traditional entrepreneur who doesn't have the time or connections to find money the old-fashioned way. "The biggest benefit to using the Net for start-up capital is the access of information," says Dawn Anderson, 35, founder and owner of business financing Web site LoanBiz.com. There are plenty of people who have potentially great ideas but don't know how to put together a plan. But with the Net, it's easy to get started--you'll have access to experts, free downloadable forms, even opportunities to chat with people who may know the perfect investor for you. In an afternoon, you can post your proposal on Web sites where VCs, banks and angels are all seeking investments. That's not a misprint; investors will come to you.
Just because the method has changed doesn't mean you can go in unprepared. Before you approach investors, you've got to write a detailed business plan and funding proposal, notes Martin Cohen, vice president of Allegiance Capital Corp. in Dallas. "You must adhere to the principles of business if you want to succeed."
Go to www.bplans.comfor good business plan samples and visit www.businessfinance.comfor a downloadable funding workbook. Visit www.ideacafe.comfor free advice from financial experts, and get free guidance from the SBAor SCORE.
Put Yourself Out There
Okay, you've done the hard stuff--now it's time to test your idea. There are sites that will post your plan and get it in front of investors' eyes. Every site has different requirements; some want detailed business plans and finance proposals (www.garage.com), while others initially want only a quick pitch (www.theelevator.com). It's not a bad idea to submit to more than one site, as long as you've done the research and are certain your idea will fit in with their investors' requirements. For instance, Garage.com, one of the largest investor search sites, specializes in high-tech businesses, while LoanBiz.com is involved in mostly real estate/collateralized loans.
Prepare For The Online Meeting
Meeting Of The Minds
|Let investors hunt for you. "Pennies From Heaven" will let you know how to get your company out of the dark and into the funding limelight.|
You wake up one morning, hop online, and boom! An investor has requested a meeting. Before you call your friends to tell them you've found financing, sit down and breathe. Your work has just begun. Some investors want to communicate online and explore your idea further before meeting in person. For instance, at Theelevator.com, you'll chat online before an actual meeting occurs. But once you've established that your plan meets the investor's criteria, it's time to sell yourself face to face. (You didn't really think you could do the entire deal in your pajamas, did you?) In preparing for your meeting, remember: Most investors think the person behind the deal is just as important as the business itself.
Take along any paperwork that pertains to the deal (business plan, proposal, projections), but also be mentally prepared. Remember that this person is considering investing a lot of money in your business, and it's your job to assuage their fears. You must know your business cold, and be prepared to answer some tough questions, such as: "What did you base your five-year forecast on?" or "What makes you think you can make this business a success?"
|Top Five Ways Not To Get Money|
1.Having no cash of your own to invest. Investors want to know you're willing to take some risk, too. You'll need the cash it will take to travel and meet with investors, do the the research, make prototypes and so on.
2.Asking for too much money. Know the worth of your business before you approach investors, and if someone offers you a lower figure, take it. You've overvalued your idea.
3.Not being prepared. There's no better way to get turned down than to arrive at a meeting with half-assed proposals and bits of that morning's breakfast on your suit.
4.Not being selective about who you approach. You don't want to be the person who asks everybody for money. (Believe me, these people talk to each other.)
5.Not being confident about who you are and why your business will work. Investors are approached by hundreds of entrepreneurs. Make yourself stand out by believing in yourself and your plan.
Beware Of Frauds
There is fraud in every kind of business, and the Internet is no exception. Protect yourself from scams. Hesitate to do business with anyone who charges you costly upfront fees or makes silly guarantees. Run from anyone who wants to offer you capital to run the company themselves but keep it in your name. And lastly, says Anderson, "Think twice if you hear any of these terms: offshore financing, no qualifying necessary, tax-free, a loan with no payback requirements."
Yes, the Internet affords endless opportunities and opens a new world of financing for start-ups, but remember that in the end, as in any business deal, it's the unique business concept, the flawless preparation and the confident presentation that will pique the interest of most legitimate investors. For now, go sit in your chair, get online, and get to work!
Suzanne DeWalt is a freelance writer and an expert at doing things the easy way. She's the author of How to Start a Home-Based Interior Design Business (Globe-Pequot Press, $17.95. www.globe-peaquot.com).
Allegiance Capital Corp., www.allcapcorp.com.