1. FINANCING

2. ENTREPRENEURIAL RESOURCES  As a Business owner you must consider both the long term and short term capital needs for your company  What are Short Term Needs?  Start Up Costs – Property / Licenses or Permits / Inventory  What Are Long Term Needs?  Future Growth – Equipment or Technology / New Property or Facilities / Research and Development

3. BOOTSTRAPPING  Cutting any unnecessary expenses  Hiring as few employees as possible – Do the work themselves if possible  Employees are expensive – Wages / Benefits  Leasing vs Buying  Don’t need down payments / Can hold on to more cash at the beginning  Be Creative  Having Friends or Family Help

4. FINANCING THE START-UP  Typically personal resources  What are the sources?  Personal / Friends and Family / Private Investors / Partners  Equity Capital  Cash in exchange for a % of Ownership  Think Shark tank  Debt Capital  Taking out Loans  Banks / Small Business Loans

5. OBTAINING FINANCING  You must have  Predictions for your company  Income Statement / Cash Flow Statement / Balance Sheets  Expectations  Private investors typically want to be involved  Banks want you to repay the loan

6. 5 C’S  Character  Reputation as a person and in business  Capacity  Can you repay the loan? Your cash flow  Capital  Net worth of the business. Do assets exceed liabilities?

7. 5 C’S (CONT.)  Collateral  Assets you agree to give the lender if you can’t repay the loan  Conditions  Environment or circumstances at the time of the loan  Growth Potential / Competition / Location / Ownership Type

8. DUE DILIGENCE  Investigation and analysis of a business before making business decisions / investing in a company  Why Important?  Background checks of owner(s) and business

9. CALCULATING START-UP CAPITAL NEEDS  Start-Up Costs  What do you need from suppliers / vendors / manufacturers / distributors  Determine what you need and how much it costs  What are things every start up business will need?  Operating Costs  Working Capital – Amount of money needed to carry out daily operations  What are daily costs of all businesses?  Contingency Funds  Money saved for the unexpected  Examples?