The Ultimate Guide to Business Funding

If you have a brilliant business concept, an emerging entrepreneurial venture or just want information about writing business proposals and funding resources for your business, this article will provide information in both areas.

Starting or growing a company can be daunting - new entrepreneurs can gain much wisdom from these established resources about how to present or apply business ideas to investors, venture capitalist firms and grant applications. Most importantly, you can avoid having to comb through many funding sources for the truly legitimate ones. The information should prove essential in the early stages of your entrepreneurial venture.

Writing the Proposal - Financing Options - How to Find & Retain Funding -
Government Resources - Grant Funding Organizations - Grants for Women -
Venture Capitalist & Angel Investor

Writing a Business Proposal

  • 4hb offers tips on putting together business proposals, including focusing on clarity, communication of the business and plan instead of being flashy, professional presentation and keeping the verbiage professional without being unclear or using jargon.
  • Capture Planning offers a complete business proposal-writing guide. It covers topics such as layout and design, essential inclusions in a proposal, how to approach writing a proposal for a government grant or funding source versus that of a private sector company, among many others.
  • Microsoft Small Business has a nine-step guide for individuals who are trying to put their company blueprint in writing. It emphasizes the importance of the proposal in that it is the document upon which most investors and lenders base their funding decisions entirely.
  • More Business has advice on writing clearly articulated business proposals that reflect an organized thought process, well-researched understanding of the market and potential customer needs and a visually appealing and professional presentation.
  • My Own Business has a detailed outline and articles for individuals to utilize while planning their business proposals. A couple things the outline contains are how to format the business plan, essential factors to include and what to avoid, and finally sample business plans.
  • US Small Business Administration has an entire section of its website dedicated to small business planners and writing business plans. It offers a comprehensive guide to the beginning stages of starting a small business.
  • Young Money has an outline for organizing a successful business proposal. The essential sections that should be included are the executive summary, mission statement, products/services, market analysis, and the marketing and promotion of the company.

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Financing Options

  • Angel investors are individuals with high net-worths who are willing to fund small business ventures for shares on the return. They typically invest in groups, and this can be both an incentive and a drawback. While they can offer their own advice and business smarts, it is often difficult to find a group of angels who are all interested and willing to invest in one starting company.
  • Debt Financing through various financial institutions can provide lines of credit that can finance the company. Of course, they will also come with interest rates and variable repayment schedules, and they will examine your business proposal very closely for liquidation and collateral potential.
    • Personal and credit card loans with various financial institutions can also help fund your company. Based on your credit and borrowing history, you can secure funds but come with horrific consequences if the subsequent payments are not made on time.
  • Equity types of financing are supported by various individual ‘angel' investors and private investors for equity ownership in the sponsored company.  This process can be relatively simple or sophisticated when you enlist the support of firms and venture capitalists.
  • Friends and family can potentially provide a decent chunk of money to fund a small business. While acquiring the money may not come with legal ramifications or other difficulties, it is still important to remain professional and fully communicate both the business plan and the possible risks associated to investment and entrepreneurship.
  • Grants, mostly from government organizations and programs (federal, state, regional and minority types), can offer significant sources of funding. Finding a good match and being competitive enough will be challenges, however. Many emerging companies will attempt to acquire this type of funding and the grants themselves often have strict usage restrictions.
  • Strategic investors can offer you money, resources within the industry into which your business wants to break and possibly even a good reputation as a result of the business relationship. However, this may also mean that they can control their relationship with your company, influence your company to make business moves that ultimately help their motives and other issues.
  • Venture capitalists are good sources of funding especially when a business has passed the start-up phase and are looking to expand greatly. They can offer millions and millions of dollars and are networking and business resources, but require swift returns and growth in exchange for their support. Often you must also be willing to sell the company or go public.

(StartupNation & Parker Associates)

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How to Find & Retain Funding

  • Business Owner's Toolkit's article gives advice on how to retain funding during a tough and turbulent economy. It reminds entrepreneurs to protect personal assets, be mindful of business cash flow, watch the market, minimize overhead and make sure to keep an eye on what's ahead.
  • Entrepreneurship's article on angel investors and the new trends in business financing goes into detail about access and the benefits of working with angels in particular. Entrepreneurs can go to groups of angels who not only provide start-up money but also have resources and networking connections and cooperation with venture capitalists and firms who can provide sustained and future financing.
  • Forbes' article evaluates the advantages and disadvantages of borrowing money and of involving equity investors to fund a business. The concluding advice is twofold - start-ups are better off with equity investments and loans are better for ongoing funding needs (and businesses with existing cash flow).
  • Harvard Business School's article explains the role of government funding in the success of many entrepreneurial ventures, particularly a couple that established Silicon Valley's reputation for entrepreneurs and wildly successful new businesses with great potential. Professor Josh Lerner mentions that the government continues to help with direct investments and ensure that the economy is as conducive to entrepreneurial initiatives as possible.
  • Joe Hadzima wrote in Boston Business Journal that funding sources are not equal. He clarifies the differences, benefits and risks between a couple sources of funding such as venture capital, brokerage firms, strategic partners and others.
  • Read Write Web outlines 12 different ways to accumulate seed funding for a start-up business, suggesting mixing one or more methods to reach the targeted amount.
  • The Wall Street Journal has a couple articles on funding, particularly how to choose a bank for your business financing needs, how to borrow money for a business from personal relations, how to use a 401K or IRA to fund start-ups, and other related topics.

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Government Funding Resources

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Grant Funding Organizations

  • Council on Foundations has a Community Foundation locator that allows searches for regional foundations by state. Many of these foundations can be valuable resources for business grants and funding.
  • Dmoz has a searchable directory of grant-making foundations. They can also be browsed by region and various subcategories.
  • Foundation Center offers a searchable repository of grant-makers for the purpose of finding viable funding sources.
  • Foundations is an online listing of community foundations, some of which offer business grants.
  • Google provides a directory of grant-giving foundations.
  • Yahoo has a searchable directory of grant-giving foundations that is also organized into categories.

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Business Grants for Women

  • American Association of University Women give grants to women who have a bachelor's degree and either want to advance their careers, change careers or re-enter the work force.
  • Digital Women Grants is an online resource that has information about foundations that fund women's enterprises, business grants, minority grants for women, grants for single mothers and other related sources of funding.
  • Funds Net Services has a list of grants available for women through various programs, organizations and foundations.
  • Grants for Women provides a list of grants given by various organizations and foundations.
  • McCormick Foundation New Media Women Entrepreneurs program provides women who start new ventures like new websites, mobile news resources, or other journalistic and interactive initiatives.
  • Valentine Foundation provides grant money for entrepreneurial programs, businesses and organization that aim to facilitate social empowerment, betterment and change for women.
  • Woman Owned is a website that offers a complete set of resources for women entrepreneurs. There are articles about starting up a business, growing the company (including information on funding and business grants), and finding woman-owned companies.
  • Women's Business Grants is a large online repository of business grants available to women by state.

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Venture Capitalist and Angel Investor Funding Sources

  • Business Finance allows you to search sources of venture capital funding and get matched with particular sources.
  • The Funded is an online repository of funding sources worldwide that are posted, researched, rated and reviewed by other entrepreneurs.
  • FundingPost connects angel and venture capital investors with entrepreneurs.
  • Go4Funding is an online platform that allows entrepreneurs and business owners to post their capital needs and for investors to browse through these potential investment opportunities.
  • GoBigNetwork allows entrepreneurs to connect with various investors by posting business-funding requests and has a searchable directory of investors organized by investment capital capacity.
  • growthinkResearch's research and online database allows entrepreneurs to raise capital, investors identify promising new opportunities and for investment bankers to find new clients.
  • VentureDen is another online hub where investors and entrepreneurs can connect. Entrepreneurs post their business plans and investors can choose to explore them.
  • vFinance provides a directory of angel investors, venture capital firms and sample business proposal templates as funding resources.

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