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Start Up Financing – A Challenge

Start-up expenses are those expenses incurred before the business is running. Some businesses can be started on a shoestring budget, while others may require considerable investment in inventory or equipment. It is important to know whether you will have enough money to launch your business venture. But every business is different and has its own specific cash needs at different stages of development; therefore there is no generic method for estimating the startup costs for the business.

Entrepreneurs must prove their concept first before anyone will put up any kind of money. But most businesses require some sort of initial capital for things like inventory, marketing, physical facilities, incorporation expenses, etc. A start-up worksheet to plan the initial financing of the business is highly recommended.

The stages of the fundraising process can vary in ten-step models.

  1. Evaluate your business concept and organization as an opportunity: its strengths and limits will help define potential capital sources.
  2. Determine how much money will be required soon
  3. Study the likely types and level of financing the start-up will attract.
  4. Complete the management team.
  5. Prepare for fundraising: refine the business idea; write the Business Plan and Executive Summary.
  6. Evaluate & confirm the legal issues.
  7. Make contacts; find lead investors.
  8. Begin due diligence.
  9. Close financing -- in stages if needed.
  10. Follow the Business Plan, as it continually changes.
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