How can you structure a financing deal to meet the needs of your business and investors? (2024)

Striking the balance between debt and equity to finance businesses can be tricky. Equity provides time for businesses to grow to fruition, but it takes a portion of ownership interest away from the founders, thereby implying losing control. On the other hand, with debt comes cost of capital, which could be a significant burden for startup companies. Therefore, founders should be able to forecast the cash generating capacity of the enterprise and its ability to finance debts before deciding on the option of debt financing. Some enterprises, including traditional heavy industries, take time in the investment process before they start generating significant cash inflows. In such cases equity financing could be preferable.

💡 A deep understanding of financing nuances significantly shapes a business's trajectory. 🔍 Financial AssessmentAssessing financial health is vital, analyzing cash flow, profit, debt, and metrics. It guides funding decisions.📈 Growth ProjectionAccurate growth projection is crucial, including market analysis, revenue forecasting, cost assessment, informing financing choices.🔄 Financing FlexibilityEvaluate financing flexibility; venture capital may require equity, loans have repayment obligations. Assess repayment schedules, rates, and covenants.📌 Aligning financing with your needs demands understanding your financial position, growth potential, and flexibility. It benefits your business and investors.

Before you go out or have more than the most preliminary discussions, you have to have a 3 statement model that flows. This is the Rosetta Stone of business.

Knowing your goals thoroughly, is key. As an upcoming business you must know the global impact of your product/service. Your goals should then be derivatives of the impact as you strive to connect with key stakeholders. Your funding source should similarly be aligned. Consider their experience in your industry as well as their reputation.

First of all that person financial level, then how to improve our income minimum, then start minimum investment for mutual fund is best option for long term goal ,and life insurance for Start tax free income and our family future related cover also ,then health insurance that three thing must

La base cuando se solicita financiación es saber que es lo que necesito y hasta donde puedo llegar. Saber sus propios límites. Sobrepasar lo que podemos asumir a la hora de solicitar puede ocasionar que de inmediato sea rechazado. Igual hay que estar dispuesto a dar las coberturas que imaginamos puedan solicitar, teniendo en cuenta nuestra realidad financiera en la empresa.

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This stage is very crucial. What you negotiate determines how much influence you will retain in your own company! I know you need capital but be a tough negotiator as well. Do not simply roll out the red carpet for the investors. You are selling them shares and not the whole company so if you are not good at negotiator, engage the services of one! I cannot stress how important this stage is! You do not want to find yourself isolated and sidelined in your own company! Get a lawyer to help you interpret things! Do not sell yourself short just because you want to save money! Pay for a good lawyer and a negotiator if you have to.

Aqui é importante ser realista sobre seu negócio.Tente estipular um cenário ruim e verificar se mesmo neste cenário o seu negócio gera mais caixa que o valor da divida. A TIR do seu negócio tem de ser positiva contra a dívida.

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Alinhamento de Expectativas: Garanta que as expectativas estejam alinhadas desde o início. Compreenda o que os investidores esperam do seu negócio e esclareça o que você espera deles.

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Don't forget. Whatever your terms are, your business needs to be cash flow positive.If the investor is lending money, do the payment terms allow you to be cash flow positive each month?Remember, profit does not equal cash flow. Using accrual accounting, it is very easy to show a profit and have negative cash flow.