How To Raise Money

Datafordummies · Site Admin

The hardest part of developing your venture is obtaining funding. Before anyone - even friends and family - is willing to invest, he needs to be assured of the wisdom of your venture. The best way to do this is to start with a serious assessment of the feasibility of your project. Not just your product or service, but evidence that you have thought through every aspect before jumping in.

WHAT IS VENTURE PLANNING?
Venture Planning is a personal assessment of your feelings and the feasibility of a venture. As a process, it examines the force that drives you, customer opportunities and profiles, financial resources, feasibility and alternatives. Venture Planning is not about writing a Business Plan, nor does it require detailed funding source analysis, professional opinions or market analysis.

Venture Planning is development of a means of comparing various business models, usually through financial modeling to answer the following questions:

Which venture concept produces the most sales, the best margins, the highest net profit and the lowest breakeven?
Which model requires the least investment by entrepreneurs and others?
Which concept requires equity as opposed to debt financing?
Which produces the highest 'Return on Investment' and the best liquidity?
Which model requires the entrepreneur to give up the least equity?
Identify and quantify the risks involved with execution of each model.
Keys to good venture planning

Focus on one venture at a time in one business area at a time.
Discover the opportunity first, then evaluate how to exploit it.
Develop three cases good, bad & likely for each scenario of a venture concept.
Identify what type of venture you want. Each type has an entirely different model, implementation and end result.
QUESTIONS to ask yourself before starting your venture

Compelling Interest of the Entrepreneur
Why do I want to start this business? If it is money, why and how much?
If you need partners, what truly drives them?
Are you in agreement with them on goals and styles?
What type of venture do you want to start and why?
What information do you have that may have a bearing on the new venture?

Customer Opportunities
Is your venture based on a true marketplace need, not an idea from your family and friends? Do people really want this or do you think they need it?
What do you really know about the marketplace?
What is happening in the marketplace to fill this need?
Are there follow-on opportunities to allow a growing business and multiple products?

Customers
Who specifically are your customers and how many of them currently exist?
How will you get information to those customers?
Will you sell directly or indirectly to your customers?
Will you be selling to businesses, end users or resellers?
Have you talked to potential customers about their needs and how to best satisfy them?
Will you have direct contact with your customers?
What is your best estimate of total market size versus the number of customers you can reach?

Venture Models
How can you turn the idea into a viable business?
Can you do this best by R&D with licensing, distribution, retail, or service company models?
Is there current competition and how will I gain a competitive edge over them?
How much time is needed for the pre-startup phase and how does it affect the window of opportunity?
How can you shorten the time frame or extend the market window? What factors control the time frame and how can it be impacted by others or outside events?
How can you control risk? Can you pre-sell or pre-qualify likely sales?
Has anyone else started a similar venture?

What type of venture is this?
Lifestyle - $1 million in annual sales, 1-4 employees, solo operation
High Profit - $1-$20 million in sales, 5 - 50 employees, partners required
High Growth - $20-50 million or more in sales, more than 50 employees, requires venture capital, investment banks, public company

Financial Resources
How much money is needed to reach startup, the first year of operation, and when do you need it?
Do you have it? Where will it come from?
Will it be Debt or Equity? And, how much equity is required to obtain the financing?

Entrepreneurial Assessment
Do you have what it takes?
What would represent success to you? Outrageous success?
What would represent a fun way to achieve that success?
What critical skills are required of you to achieve that success?
Do you have those skills? If not, how will you acquire them?
Do you have direct experience related to the venture?
What key contacts, skills, education or other attributes will help you with this venture?
Do you have contacts to help you objectively evaluate this venture?
Do you have contacts that will help you finance this venture?
What personal benefit will this venture bring you?