1000 Business Lessons Every Businessman Must Know

Chapter 11 Entrepreneurial Financing: Multiple Channels to Solve Financing Difficulties
[-]. Why financing
078. Entrepreneurship requires financial preparation

For those starting a business, the more money you have, the more options you have and the better your chances of success.Therefore, you must have the necessary preparation funds before starting a business.

1. Prepare a start-up capital

Nothing happens without funding.The source of funds can be planned through various channels, such as self-owned funds, fundraising, loans, and partnerships with others.The more start-up capital, the better.This is because there may be difficulties in cash flow after the business starts.Especially when you are just starting to do business, this possibility is even greater, and the ability to manage funds while operating is far inferior to that of a businessman who has already established a certain foundation.If the prepared funds are not in place, it may ruin your fledgling business with a meager amount of funds.Therefore, it is necessary to fully consider the raising of opening funds, reserve and use them in a timely, appropriate, and appropriate manner, and make overall arrangements for the use of funds, and strive to minimize risks.

2. Realization of movable or immovable property
Realization of own movable or immovable property is the main and most reliable source of funds.In the past, rich people kept their money at home, even in the cellar, for fear of being exposed.Nowadays, people deposit in the bank and turn it into a deposit to earn interest.In the eyes of the operators, the value-added of money that only eats interest is too slow, and if the money is turned into capital, the capital can quickly increase in value.Capital can only increase in value when it is in motion, and the funds invested in production and circulation can be profitable.Capital can change its value form and absorb talents, technology, information, raw materials, and equipment.If you find a suitable project after careful selection, and you have confidence in technology, market, etc., then decisively invest the money at hand into the project you have fully demonstrated and selected.But there is one thing that should remind you to keep some reserve funds in case of accidents. As the saying goes: eggs cannot be put in one basket.You can set aside a portion of the money to buy national bonds and savings for emergency use in family life and business, and it can also enable you to deal with things calmly.

3. Fundraising through others
If your own funds are not enough, you can raise funds from relatives and friends, or mobilize other bosses to invest.But if you want to convince others, you must have a set of detailed implementation plans and feasibility demonstrations.Add your personal charisma and verbal persuasion to convince others to invest.It is necessary to promise and realize the sharing of risks and benefits, and use other people's money carefully and carefully. I would rather suffer losses, and ensure that the investment returns to others will be honored as agreed.Only in this way can you have credit, and others will continue to lend you money or continue to invest in you. When you are in trouble, everyone is willing to help you. Remember "it's easy to borrow and repay, and it's not difficult to borrow again" in life and business We must pay attention to the word of faith.Of course, if certain conditions are met, bank loans can also be used to raise entrepreneurial funds.

Before starting a business, you must make sufficient financial preparations.Only in this way can we ensure that the business can proceed smoothly according to the established plan.

079. Capital is the blood of operation

The establishment, survival and development of an enterprise must be based on financing, investment and refinancing one after another.Capital is the blood of an enterprise and the first and continuous driving force for its economic activities.

For entrepreneurs, the biggest difficulty in starting a new business is how to obtain funds.If entrepreneurs cannot raise enough start-up capital, not only will it be "difficult to move forward", but it may also cause the enterprise to fail to survive.Therefore, for entrepreneurs, it is necessary to correctly understand the importance of financing and find a way to solve the capital problem of starting a business through financing.Only when the funds are in place and used rationally, can entrepreneurs achieve a good start in the shortest possible time.

In fact, at the beginning of a business, the financing ability of the entrepreneur often affects the survival and development of the company. An entrepreneur who can correctly understand the significance of financing and is good at financing is often easy to make the business successful.

At the beginning of starting a business, entrepreneurs do not have to have sufficient funds to start a business. They can also start a business through financing after they have a business plan and project.In the process of starting a business, as long as entrepreneurs have a correct understanding of financing and win the trust of investors, it is often easier to raise more funds, thereby creating a good financial environment for the survival and development of the company.

Therefore, at the beginning of starting a business, entrepreneurs must have a correct understanding of financing, actively carry out financing work, expand financing channels, and raise more funds for the survival and development of the enterprise.

[-]. Where can start-up capital come from?
080. Self-funded
Few entrepreneurs start a new business without using personal capital, because from the perspective of capital cost or business operation control, personal capital cost is the cheapest, and because they are trying to introduce external capital, especially It is necessary to have personal capital when obtaining funds from banks, private investors and venture capitalists.

While some entrepreneurs are well aware of the risks involved in starting a business, others feel that they do not possess the talents and skills necessary to successfully grow and run a business and therefore consciously avoid using their own funds.

Investors of external funds usually think that if entrepreneurs do not have capital investment themselves, they may not be so dedicated to business operations.The key to the investment level of personal funds lies in the proportion of the entrepreneur's investment in all available assets, not in the absolute amount of invested funds.External investors require entrepreneurs to invest all available assets, thinking that this is a sign that entrepreneurs are really confident in their business and will make necessary efforts for the success of the business.Entrepreneurs should always keep in mind that it is not the absolute amount of invested funds, but the proportion of available funds that ultimately determines the satisfaction of external investors with the entrepreneur's investment level, and then decides whether to invest.

081. Private lending
Funding required in the early stages of a start-up is highly uncertain and lacks economies of scale for banks and other financial institutions due to the small amount of capital required.With some exceptions, institutional equity investors and lenders are rarely involved in this stage of start-up financing.

Therefore, at this stage, for new ventures, apart from the entrepreneur himself, family or friends are the most common sources of funding.Because of their kinship with entrepreneurs and because of their easy access, they are the most likely to invest.Getting to know each other helps overcome one of the uncertainties faced by unfamiliar investors: getting to know the founder himself.Family and friends can provide small amounts of equity funding for new ventures, partially meeting the small capital requirements of most new ventures.Sometimes the help of family or friends does not directly provide funds, but helps entrepreneurs obtain the required funds by providing guarantees and other means.

082. Loans from banks

A bank is a special enterprise specializing in currency credit. It gathers a large number of depositors' huge funds at a certain cost, and then uses these funds to make profits.Except for a part of the bank's investment, most of it is used to issue loans.

There are three things to keep in mind when applying for a personal loan from a bank:

1. Use preferential policies
Start-up loan refers to a special loan issued by an individual with a certain production and operation capacity or already engaged in production and operation activities, who applies for capital needs for starting a business or re-starting a business, and is granted an effective guarantee by the bank.Nowadays, Industrial and Commercial Bank of China, Bank of China, Agricultural Bank of China, Shanghai Pudong Development Bank, CITIC Industrial Bank, Bank of Communications, etc. have all launched personal business loan business. Housing, securities and other mortgages, pledges, and powerful people provide guarantees to solve loans. The maximum loan amount can be 200 million yuan.

2. Shop around

According to the regulations of the financial regulatory department, each bank can raise or lower the loan interest rate within a certain range when issuing commercial loans. For example, the loan interest rate of many local banks can rise or fall by 30%.In fact, going to the bank for a loan is the same as going to the market to buy things. You have to pick and choose and shop around to find good quality and cheap products.Relatively speaking, the loan interest rate of state-owned commercial banks is lower, but the procedures are stricter. If your loan procedures are complete, you can compare the loan interest rates and other additional charges of various banks, and choose a low-cost bank to handle .

3. Reasonably choose the loan term and interest rate

Bank loans are generally divided into short-term loans and medium- and long-term loans. The longer the loan period, the higher the interest rate.If the time required for the entrepreneur's capital use is not too long, try to choose short-term loans. For example, if you plan to apply for a two-year loan, you can borrow once a year, which can save interest expenses.In addition, start-up financing should also pay attention to the trend of interest rates. If the trend of interest rates is rising, you should rush to apply for a loan before the interest rate increase, so that you can enjoy the low interest rate before the interest rate increase in the current year; Under the circumstances, you should suspend the loan application, and wait for the interest rate to be lowered and then processed in due course.

083. Apply for venture capital
Venture capital is a financial means, but it is quite different from other types of financial means: venture capital is different from bank loans, bank loans need to be based on the financial status of the company or individual requesting the loan, and require certain guarantees to grant loans.

In a sense, venture capitalists and investees live and die together.

If entrepreneurs want to obtain venture capital, entrepreneurs must let investors know what they most want to know.What they most want to know when contacting entrepreneurs is: the basic situation of the company, what the company produces, the technical strength of the company, whether the products really have strong vitality, the current operating conditions of the company, and the quality of the management personnel of the company , Whether they have the so-called entrepreneurial spirit, the character of the business executive, etc. These are the first things they need to know.

Next, you should explain the amount of venture capital the company needs, where the venture capital funds go, and the allocation of investor equity.For them, the amount of investment and the distribution of equity are not the most important, but the most important thing is whether the investment can make a profit, the amount of profit and the length of time.They are always ready to sell their shares in the businesses they own to third parties.Therefore, it is most important for investors to have confidence.

084. Equity financing
For newly established start-up companies that have not yet been well-known, how to attract investors' interest and confidence in the company?How to make the majority of investors focus on themselves among the numerous investment opportunities?How to win by surprise and obtain the required funds in the highly competitive capital market?This is not an easy task.

The main way for start-ups to obtain development funds is to attract investment.There are many investors in the market, how to attract investors to pay attention to the company, and then make them have confidence in the company's development, future and potential, and thus become interested in investing in the company, and make up their minds to really take investment actions?The management of the company is faced with a large number of investment groups, including banks and other large investment companies.However, what kind of strategy can attract these investors?We believe that we must start with a detailed business plan.A detailed business plan is the stepping stone to a successful business, or the ticket to the investment gate.

Entrepreneurs carefully write business plans in order to attract investment, and rewrite them again and again after discovering shortcomings. Ultimately, they hope to come up with the most perfect plan and achieve the goal of attracting investors.But don't forget that having a perfect plan doesn't mean the money is in place.Although a good business plan does not need to be known to the public, it needs to be known to all potential investors. It is even more necessary to find investors with high investment possibilities, and then introduce and explain them to gain trust and confidence, so as to achieve attraction. purpose of investment.Therefore, a good business plan should be presented to the most appropriate object at the most appropriate time and in the most appropriate manner.If all the conditions are met, it can be said to be invincible in this battle to attract investment.

(End of this chapter)