How do I make an inventory list and other spreadsheets for my restaurant?
Spreadsheets serve as a great complement to, or replacement for, the other software a restaurant might rely upon. Spreadsheets can handle nearly any task you require of them. They are very versatile. Small restaurants, with a limited software budget, might find them particularly useful.
The author states that a computer is “Second only to a good set of knives”. And spreadsheets are “the cat’s meow.” They can help a restaurant with organization.
Spreadsheets can intimidate some people. But, they are only as complicated as you make them. It is suggested that you take a course if you must. Particularly if you want to take advantage of the power of formulas.
Spreadsheets will make your life as a restaurant manager easier. Once you take a little bit of time to climb the learning curve.
Spreadsheets can fill in gaps in functionality for pieces of software. Many POS systems and most accounting software will export to .csv format – which can then be imported into a spreadsheet.
Some of the things a restaurant can use spreadsheets for
Staff scheduling
Drop in pre-made shifts for each employee
Order sheets
Purchase orders for ingredients
Automatically calculate tax and totals
Vendor lists
A master list of all vendors with name, address, phone, and email
Keeping good documentation will help with financing. Good documentation provides detail about how and why your startup restaurant will be successful. Spreadsheets are an excellent tool for providing documentation.
“Is crowdfunding considered income?” Yes. Reward-based, equity, and donation-based crowdfunding are generally going to be treated as income by taxing authorities. Debt and real estate crowdfunding, due to their unique nature, will most likely not be considered income. However, if crowdfunding is used for business purposes, expenses can be deducted against the income.
Of course, none of this is tax advice. You should consult with a tax professional before starting a crowdfunding campaign.
Crowdfunding is fundraising in the age of social media. It is a rapidly growing means for businesses and individuals to raise money.
There is no such thing as a free lunch. Or, so they say. Donors who contribute to crowdfunding campaigns will typically expect to repaid tangibly or intangibly.
How many types of crowdfunding are there?
Generally speaking, there are five types of crowdfunding. Most of which need to be paid back in one manner or another.
Reward-based crowdfunding
Many entrepreneurs and startups will use this type of crowdfunding to raise funds for a given project or the organization as a whole.
Donors are paid back with rewards. Often, the rewards are proportionate to the amount contributed.
Frequently, the reward will be the product or service that the crowdfunding proceeds were raised for. In other words, if an entrepreneur has an idea for a new product, they can start a crowdfunding campaign and repay donors with free product once manufacturing begins.
Equity crowdfunding
This is like traditional equity financing for a small business. Except, instead of offering equity in the company to select investors, it’s offered to the public as a whole. This type of crowdfunding is not paid back directly. Rather, donors are repaid through the appreciation of their equity.
Equity crowdfunding is also known as investment crowdfunding or crowd-investing. Since the funds raised are for getting a company off the ground, a considerable amount is usually needed.
Every donor will receive partial ownership in the newly-created company. Of course, the amount of ownership depends on the amount contributed.
Equity crowdfunding enjoys many of the same advantages and disadvantages as traditional equity financing.
Debt crowdfunding
This type of crowdfunding is better known by another name – peer-to-peer (P2P) lending. Like all borrowed money, debt crowdfunding needs to be paid back – with interest.
Debt crowdfunding is often used by individuals and less so by businesses.
It is similar to traditional debt financing in many respects. Funds are paid back on the P2P platform. From there they are dispersed to the lenders/donors. Interest is charged on the borrowed funds and repayment is made on an installment basis.
For a small business, debt crowdfunding has many of the same pros and cons as traditional debt financing.
Real estate crowdfunding
Real estate crowdfunding connects investors with real estate opportunities. This allows investors to diversify and participate in real estate investments without actually obtaining financing and dealing with ownership.
Investors can also get away with contributing considerably less than they would if they were participating in a traditional, large-scale, real estate investment.
This type of crowdfunding is paid back to the investors by the orchestrator of the real estate deal. Payouts are typically made quarterly and are dependent on the revenue-generating performance of the real estate investment.
Donation-based crowdfunding
This type of crowdfunding is more related to charity or fundraising than business uses. As such, it does not need to be paid back with cash.
Donation-based crowdfunding is typically used to raise money for personal needs or community projects. Oftentimes, fundraisers will go viral when they are for an especially empathetic cause.
Raising money for people who need help with medical expenses, financial hardship, or things such as a community garden are examples of donation-based crowdfunding.
Is crowdfunding free money?
Even if the type of crowdfunding utilized does not require cash payback, contributors typically expect to see some sort of tangible return on the money they donated. That return could be as simple as seeing their donations contribute to some sort of net positive for society.
With all types of crowdfunding, there are fees withheld by the platform. This is how they earn their money and continue to serve as middlemen between donors and fundraisers.
Raising money through crowdfunding takes considerable effort. So, there is a cost beyond dollars and cents.
First of all, it is necessary to create a compelling story. A reason for your potential donors to contribute to your crowdfunding efforts. This is not to say that the story should be fabricated or embellished. Rather, it must be conveyed in such a way as to pull on potential donors’ heartstrings and purse strings.
The other challenge is the marketing of your campaign. Crowdfunding is a heavily-used and continually-growing medium for raising funds. If you want to meet your funding goals, you’re going to have to exert considerable effort to get your campaign in front of eyeballs. This effort can be your own, or you can hire help.
Finally, if you set up a donation-based or reward-based crowdfunding campaign, you need to be prepared to return that money if you can’t meet the goals you promised…
Paying back crowdfunding money
Generally speaking, there are two options when raising money via crowdfunding.
With the “all or nothing” option, if you don’t hit your target, then no money will be taken from your supporters. The crowdfunding money is paid back to them automatically.
Alternatively, with the “keep what you raise” option, you receive whatever has been donated. Less the platform’s fees, of course. If you’ve raised considerably less than you anticipated, then the scope of your project will probably have to be scaled down.
Obviously, with the “keep what you raise” option, you would be required to pay back what you raised subject to the requirements of that particular type of crowdfunding.
If you don’t pay back your crowdfunding proceeds as outlined in the terms of service, then you could be compelled by the law to pay it back…
Crowdfunding examples
Crowdfunding can be good, bad, or ugly. One example each of successes, failures, and frauds are listed below
The Oculus Rift virtual reality headsets were the offspring of a 2012 crowdfunding campaign. At the time, the campaign raised $2.5 million dollars from 10,000 or so donors.
Two short years later, Oculus was purchased by Facebook for $2 billion. One hell of a return on investment.
Induratus might’ve been a good idea. But, the creator of this crowdfunding campaign either failed to create a compelling story or failed the market his campaign effectively.
Induratus’s crowdfunding campaign had a goal of nearly $5 million CAD. Unfortunately, it only managed to raise one single solitary CAD, as of 2015.
In 2014, the creator of the Coolest Cooler ran a reward-based crowdfunding campaign that raised a whopping $13.2 million dollars.
Donors we’re promised coolers once manufacturing was set up. Unfortunately, production delays and other problems resulted in tens of thousands of donors getting stiffed. By 2017, Coolest Cooler had to settle with the Oregon Department of Justice.
Is crowdfunding considered income?
Crowdfunding can be a great way to get your startup off the ground. However, before you start a campaign be sure to educate yourself on the tax ramifications of your particular type of crowdfunding. Also, be sure to pick the type of crowdfunding that is right for your project or business.
Make sure to create a compelling story and have a marketing plan ready for your crowdfunding campaign. this will help ensure that your campaign is successful and meets the goals of your small business.
Afraid that all your time and effort will leave you saying “Why did my SBA loan get denied?”
Lack of collateral
Applying at too big of a bank
Personal credit score less than 680
Business credit score (SBSS) less than 160
Poor business plan and financial projections
Lack of business equity
Poor/lack of documentation
Lack of industry experience
Applied for more/less than the lenders maximum/minimum
These are some of the reasons your SBA loan might get denied. At least according to a sampling of Reddit users. Reddit can be helpful, particularly in cases like this. It is usually a cesspool though. So, I saved you a trip.
SBA loans are highly sought-after because they have reasonable interest rates and long repayment terms. If you’re considering pursuing an SBA loan, browse through the following testimonials to get a better feel for how hard it can be to get approved. Hopefully, it will help you be better prepared and will increase your odds of approval – if you decide to apply.
Do you need collateral for an SBA loan?
user/TheSuperDanks
If you have minimal collateral, good fucking luck.
My buddy who is extremely credit-worthy had to basically sign his life over to get his SBA loan. He owns 2 houses, has great credit, etc. The program is just a ton of paperwork.
This Reddit user seems to think collateral is needed for an SBA loan. Granted, they didn’t apply for the SBA loan themselves. It was a “friend.” However, as you read on, you’ll see that a lot of other users corroborate the notation that considerable collateral is almost always necessary.
Here’s an idea of what types of collateral the lender might be looking for:
Real estate
Equipment
Inventory
Accounts receivable (AR)
Personal assets
Chances of getting approved for an SBA loan
user/prosignandgraphics
I have applied twice and received an education in the process.
Application Attempt #1: full business plan, a lot of drive, lots of experience in my field, a great idea but no assets to secure the risk = NO WAY
Application Attempt #2: 5 years of experience under my belt, solid cash flow, good chunk of savings, equipment and A/R to secure the loan risk = YES, how much do you want?
So basically, if you already have the money / collateral / cash flow you have a good chance of getting the loan. If you have no assets, cash flow, accounts receivables, savings etc. then your chances plummet to practically nothing.
This user, again, cites the importance of collateral.
If they’re to be believed, they had a lot going for them when they tried to get approved for their first SBA loan. However, they had no assets to help secure it.
It should be noted that they also had five years of experience upon the second application. It’s unknown how much they experience they had upon the first application. The implication is that they had very little.
Nevertheless, while the experience helped, it seems obvious that collateral contributed to them getting approved the second time around.
So, what are the chances of getting approved for an SBA loan?
Well, it seems to depend on the type of bank you apply at.
Large banks are choosier – only approving approximately 25% of SBA loans.
Small community banks and credit unions are what SCORE recommends that small businesses use. They might be on to something because these types of institutions will approve almost twice as many SBA loans. Source.
Are you personally liable for an SBA loan?
user/Pseudo_Prodigal_Son
So the easiest way to make sure your loan gets approved is to own an asset that is worth as much as the loan amount.
Almost all banks doing SBA loans will want an asset to guarantee the loan. And unless the business has large assets (e.g. a building) they can use as collateral, they will want to use your house as collateral. If you business fails, they will take your house. If you don’t own a home or have other suitable collateral, they will not give you a loan.
This user gets a little more specific regarding collateral. They state that the assets you use for collateral need to be worth twice the loan amount.
While that might not be technically true, it’s generally believable. I’ve worked in personal lending for a while and I know that lenders rarely lend 100% loan-to-value (LTV).
Why do banks loan less than 100% LTV? Because, in a worst-case scenario, when they have to repossess the asset, they’ll rarely get what it’s “worth.” The liquidity of the asset can be very low and/or they’re in a hurry to sell it. Not to mention the asset is probably in less-than-stellar shape. Therefore, they get less than market value. That’s why they like to lend less than 100% LTV.
How much less depends on other factors related to creditworthiness.
As mentioned above, personal assets can potentially be used as collateral in lieu of business assets.
Also, if you own more than 20% of the business, you have to provide a personal guarantee for the SBA loan. Because of these factors, you are most certainly personally liable for an SBA loan.
What credit score is needed for an SBA loan?
user/__Focused__
Loan broker here.
Most SBA-backed lenders won’t touch a deal that is below $50K. Your credit is also bordering on the minimum (many want 680+) and a loan would likely weigh heavily on your assets and/or downpayment.
Here, we see a user touch, again, on collateral. However, they also focus on some different requirements. Specifically, the minimum personal credit score of 680 and the minimum loan amount of $50K.
Keep in mind that there are SBA loan options for less than $50,000 – as mentioned in other testimonials.
The personal credit score needed for an SBA loan is set by the lender, not the SBA. So, the minimum personal credit score will vary.
Generally speaking, if your personal credit score is below 640, it’s very unlikely that you’d get approved for an SBA loan. In fact, plan on having a personal credit score of at least 680 to be “good enough.” As always, though, an even higher personal credit score can only help you.
As far as a business credit score goes, plan on having an SBSS (business FICO) of 160 or greater. No less than 140. Source.
What documents are needed for an SBA loan?
user/sawbucks
I’ve been successful at acquiring two separate sba backed loans. As another has mentioned you will have to write a business plan showing how you intend to use the money, how that plan will increase your revenue, and also how much additional revenue you intend to see. I used my first loan to purchase an existing business and had to show how I intended to improve the current business and come up with 3 years of projections and show how each part of my plan would affect these numbers over time. It was very involved including phone interviews with the underwriter and a very deep dive into the business itself. I was told something like 70% of sba loans dont get approved but if you have strong financials and a strong plan for the money I think youd be ok.
This user had to come up with a full business plan and financial projections.
This intensive documentation shows the lender that you have thoroughly thought out how you’re going to invest those SBA loan proceeds in your business. You’ve also considered the environment your business will operate in and what effect it will have on your operations.
Numbers don’t lie (usually), so you can’t hide behind abstract promises when you are forced to come up with solid financial projections.
Beyond the documents needed for the SBA loan, notice how the lender also made them qualify their assumptions. So, be prepared to “defend” your position when you apply for this type of financing.
How long does it take to hear back on an SBA loan?
user/abcriot
I just got an SBA loan for $100k, guaranteed by the state (CA). I have a service based virtual business out of my home. I’ve been in business less than 1 year, which is seen as risky. They required I put a capital injection of 20% ($20k), so I had to show that I in my year of business I had put at least $20k of my own cash into my business.
The whole process wasn’t to hard, but it was long. I started in November and got funded the second week of March.
The user also claims that the hardest part of getting an SBA loan was the wait.
Their experience doesn’t seem to be too out-of-the-ordinary. From start to finish the process for getting an SBA loan seems to run anywhere from 60 to 90 days. More in some cases.
It’s hard to say when in November this user started the loan process, but, at the most, it only took them one month longer than usual to hear back on their SBA loan.
This could have been due, in part, to the amount of time it took them to assemble the needed documentation. It’s difficult to know. As specified in other testimonials, the documentation requirements can be considerable.
Therefore, try to assemble the needed documents ahead of time. Also, don’t wait until you absolutely need the financing to apply. By the time you hear back, you could have missed the opportunity you hoped to capitalize on. Or, if times are tough, you might have missed the chance to right the ship.
Can you get an SBA loan for a startup?
user/nickwimp
Can you provide a overview of what’s required to qualify for a SBA loan? my father and I are starting a machine shop and need a total of 350k to get the doors open. machine costs are around 250k. Thanks
user/saxscrapers
Solid, well-thought out business plan. Personal credit scores above 640 or if not, a really good story for why so low. All owners greater than 20% guaranteeing loan. For start ups, equity injection of 20-30% (or more- it would only help). Post-transactional (after loan has been made) liquidity of the owners to fund any short term expenses that were not foreseen or some sort of outside income. Good experience of the owners/managers.
If you have all of those things, you should be pretty good. All banks have different credit tastes and prefer some industries to others, so just because one bank is not interested doesn’t mean a different one wouldn’t be willing to work with you.
This testimonial, and a few that follow, are from an “ask me anything” (AMA) Reddit post. In this post, an individual claiming to be a credit analyst for an SBA lender answered some other user’s questions.
This particular user asked about getting an SBA loan for their startup machine shop.
The credit analyst touched on some previously mentioned requirements such as credit score and personal liability. They also mentioned the “skin in the game” needed to get an SBA loan for a startup.
As mentioned previously, 20% equity is pretty standard. This shows the lender that you have something significant at stake. Which, in turn, increases the likelihood that you’ll repay the loan rather than walking away from the venture if times get tough.
The credit analyst mentions that 30%, or more, will only increase your chances of getting an SBA loan for a startup. In the lender’s mind, the more you have at stake, the more you’ll work to succeed.
The credit analyst goes on to mention how financial projections are important. But, they aren’t going to be precisely correct. So, consider how you might finance any near-term startup expenses that you didn’t anticipate.
Finally, the credit analyst mentions something that hasn’t yet been addressed in a testimonial. That’s industry experience. This is an intangible that can help you get an SBA loan for a startup. It won’t necessarily overcome some of the quantifiable requirements (credit score, equity, collateral). But, it can help influence a lender that might be on-the-fence about some of the other aspects of your business plan.
Does an SBA loan show up on a credit report?
user/moneymonda
Do you run business and personal credit reports in the loan approval process? If so on the business credit reports, are they through experian or dnb or something else? How much do the business credit scores weigh on the approval process since it can be common for a small business to not have many (if any) tradelines reported to the bureaus?
user/saxscrapers
We absolutely run personal credit reports on all guarantors of the business (SBA requires anyone with 20% or more to guaranty, or if a spouse owns between 5 and 20%, but the other spouse has over 20%, they both must guaranty). The initial bank i was with did not order business credit reports as they were rather small, but the bank i am with now does. Depending on the type of business, trade line history can range from not applicable (for cash businesses) to pretty important. The business credit reports are from either DnB or CreditSafe and show tradeline history, and collections or tax liens that are outstanding or were in the past and any UCC liens on the business. The business credit reports aren’t as influential as the personal credit scores, but do carry some merit.
This user asked the credit analyst if both personal and business credit reports were run during the SBA loan application process. In particular, they wanted to know what agencies were used to pull credit. Finally, they were interested in what weight was placed for each (personal and business) credit report.
From what the credit analyst conveyed, personal credit reports are almost certainly going to be run on any individual with significant ownership in the business. And, possibly on their spouse.
Business credit reports are a different story. This is up to the lender and may depend, in large part, on the industry you operate in. Additionally, the credit analyst stated that business credit reports didn’t weigh as heavily as personal credit reports. Which is somewhat counterintuitive since SBA loans are, technically, business loans.
Knowing that credit will be pulled might lead you to ask “will an SBA loan be reported on my credit in the future?”
Details are hard to find here, but it seems that the SBA loan will show up on your business credit report. Not on your personal credit report. Even though you will likely provide a personal guarantee on the loan. Source.
How many times can you get an SBA loan?
user/luxorius
How long does it take to obtain a SBA loan, on average? What is the smallest and largest loan size available, typically? What is the duration of the instrument? Do SBA loans typically fund a company more than once? What is the minimum balance sheet coverage and other collateral coverage that SBA loans are backed by? What types of ratios and covenants comprise SBA loans?
user/saxscrapers
From start to finish, if you have all documents needed to underwrite your loan, it can take as little as 2 months from application to closing, but those are pretty rare. Time is always a huge variable, and depending on the nature of the transaction, they can take as long as 6 months or so.
Smallest loan size depends on the bank. The bank I work at doesn’t do anything less than around $150K. There are microloan providers which only focus on loans less than $100K or so.
Duration is 7 years for working capital, 10 years for leasehold buildout/business acquisition, 25 years for real estate purchase or refinance, building improvements and possibly for equipment purchase if you can prove the equipment you are purchasing will have a useful life of 25 years. All SBA loans are fully amortized with no balloon payment.
There is no minimum balance sheet coverage for SBA loans. There is a minimum of 10% tangible net worth for USDA loans.
The great thing about SBA loans is that they are designed for borrowers that don’t meet conventional collateral requirements. Banks are specifically told to not turn down loans based on a lack of collateral given all other factors of the loan are positive (cash flow, credit scores, management capability). The one thing to note, though, is if the loan isn’t fully secured, banks are required by the SBA to lien personal real estate of the guarantor/principal if there is 25% or greater equity in the real estate.
There are circumstances where the same company will get multiple SBA loans but that is a pretty uncommon occurrence. You will see guarantors with multiple businesses that have different sba loans for their different businesses.
Ratios that we use the most are current, quick, debt to tangible net worth, gross profit margin, net profit margin, days receivable, days payable and days inventory.
This user had a lot of questions and the credit analyst took the time to answer them in-depth. So, there’s a lot to address here.
First of all, the credit analyst confirmed what had been addressed in an earlier testimonial. That the quickest you can expect the SBA loan process to go is two months. What was surprising was that they also said it can take up to six! This reinforces my earlier advice to plan well in advance.
The largest SBA loan you can get is $5 million. This is a firm number.
The smallest, though, depends on the lender. Keep in mind that the SBA has several different loan programs, some of which are designed for smaller loan amounts. This would be a good question to ask before the loan application process starts. So that you don’t waste your time and hurt your credit if the amount you need is below the lenders minimum.
From there, the credit analyst addresses the term of SBA loans. This depends, in large part, on what the proceeds will be used for. If it will be used for expenses (working capital) the term will be short. If it will be used for long-lived assets, the term can be longer. Of course, the longer the term, all things being equal, the lower the payment.
Next, we have some new insight, not discussed in any of the other testimonials. It comes back to the topic of collateral. According to the credit analyst, if your collateral isn’t worth enough to fully secure the loan, the lender will put a lien on your personal residence. In fact, they’re required to by the SBA.
While SBA loans are hard to get approved for, in light of collateral requirements. These requirements can actually be in your favor. Remember the testimonial earlier that mentioned having 2x the loan amount in collateral? That’s probably a good rule-of-thumb to keep in mind, should you decide to pursue an SBA loan.
The credit analyst goes on to briefly touch on financial ratios. These will vary by industry and be calculated in your financial projections.
Finally, maybe the most pressing question in this testimonial is “how many times can you get an SBA loan?”
This depends on what you mean by “how many times.”
Of course, if you got an SBA loan and paid it off you can get another. Assuming that the loan stayed in good standing, I could only see it working in your favor.
What about multiple SBA loans at once?
Well, it technically can be done. Up to a given SBA program’s limits. Source.
But, according to the credit analyst, it’s pretty uncommon. It’s unknown if this is because of how hard it is to get approved for an SBA loan. Or, for another reason. The exception is an individual who owns multiple businesses and takes out an SBA loan for each.
Why did my SBA loan get denied?
As you can see, there are many reasons an SBA loan might get denied. These loans are hard to get approved for and the requirements are stringent. Fortunately, there are other options if you decide an SBA loan isn’t right for you or you get denied. Good luck!
“Do you need to get a business loan for your startup?” No. But many startups will choose to secure a loan to start their business. Why? Primarily because most entrepreneurs don’t have the means to finance 100% of their startup. Also, equity financing is typically only available for high-growth businesses.
Debt vs equity financing for startups
Most startups need financial help from outside sources. These sources of financing fall into two general categories:
Debt
Equity
Debt financing
Debt is borrowed money that must be repaid according to an agreed-upon schedule and at an agreed-upon cost (interest rate).
One of the advantages of debt is that you don’t give up any ownership of your business. All the lender is concerned about is receiving regular repayment plus interest.
Once the loan is paid off the relationship with the lender ends.
Additionally, interest is tax-deductible. It is subtracted from operating profit before taxes are calculated.
Finally, debt repayment is predictable. It’s an easy expense to forecast.
That’s also one of the disadvantages, though. Debt is a fixed cost.
If the proceeds from debt aren’t used in a manner that earns a good return on investment (in terms of revenue or reduced costs) then that fixed expense drags the business down. Whether times are good or bad the cost of debt stays the same.
Another downside of debt for startup financing is that you may have to personally guarantee repayment of the loan with your own personal assets.
Equity financing
Equity is ownership of the business. Unless you give someone else equity in your business, you will always have 100% ownership.
If you finance with equity, you give up a certain percentage of ownership of your business. I.e. profits and sales proceeds.
Equity has its advantages.
For starters, you are not obligated to repay equity financing. The outside investor should understand that risk
One disadvantage of equity is that your investors may not agree with your business decisions. Since they are owners, you’ll have to take their opinions on managing the business into consideration.
Investors can be bought out, but that can be expensive.
Types of loans for startup businesses
Not all startup business loans are the same. If you decide to secure a loan to start your business, you have several options.
Equipment financing loans
Loans for startup businesses have strict standards that must be met. If you call the loan by a different name, those standards might loosen.
Equipment financing loans are for buying equipment, machinery, and other fixed assets.
The equipment you purchase serves as collateral for the loan. Repayment is typically made in installments.
Business credit cards
In addition to providing financing, business credit cards can establish credit for your business.
It’s likely that you will have to “cosign” with your business (personally guarantee) before getting a business credit card.
Business credit cards also, often, come with generous rewards programs.
SBA loans
The Small Business Administration doesn’t lend to your business directly. They guarantee the loan to incentivize the lender.
SBA loans are, typically, more “paperwork-intensive” than other options.
SBA loans can also be made for larger amounts than some other alternatives.
Microlender loans
Microlenders are non-profit organizations that provide debt financing to startups who might not qualify with traditional lenders.
These loans are typically “smaller” than those made by a traditional financial institution.
P2P loans or crowdfunding
Peer-to-peer loans, currently, are only made to individuals. Not businesses.
P2P loans are also, typically, small. But, approval and funding are quick.
Loan crowdfunding, unlike other types of crowdfunding (donation, exchange, and equity), requires payback. It’s not dissimilar to P2P loans.
Friends and family loans
Borrowing from a friend or family member might be easier. But, it can come with other complications.
Make sure the terms of the friend/family loan are clear.
Obtaining a startup business loan
If you’ve decided to secure a loan for your startup, these are, more or less, the steps you’ll follow to get funding:
Keep in mind the fixed assets you’ll need to launch.
Also, money that will need to be spent before operations commence.
Additionally, your small business will need cash-on-hand at launch
Work in an additional amount for unanticipated expenses you might incur before your business becomes self-sufficient.
2) Decide what type(s) of startup business loan you want
Review Types of loans for startup businesses, above, and choose one or more that suits your business’s needs.
3) Compare loan providers
Several different providers should be available for whatever type of loan you seek for your startup.
Compare costs, terms, credit requirements, collateral required, documentation, business requirements, and other variables between providers. A table with the providers in the left column and the variables along the top might help you compare.
Look up and compare reviews for providers, too.
APR
Loan term
Credit req
Collat needed
Docs needed
Biz req
Reviews
Provider 1
Provider 2
Provider 3
4) Assemble the needed documentation
Every type of startup business loan will require at least some type of documentation.
Common types include a business plan, historical financial statements, personal & business bank statements, personal & business tax returns, legal documents (leases, contracts, etc). Be prepared to provide more documentation. This should get the ball rolling, though.
5) Complete the application process
Each type of startup business loan will have its own unique application process.
You can apply with more than one provider at a time. This could help you secure a loan quicker. Beware of the effect of multiple inquiries on your credit score, though.
What factors can get your startup business loan application declined?
Not every loan gets approved. In fact, a lot of startup business loan applications get declined. Don’t despair.
If you do get rejected for a loan try to get an authentic reason why. Rejection sucks. But, understanding your shortcomings can help make it clear what you need to work on.
Here are some areas to address, before you apply, to minimize your chances of rejection.
Low credit score
Lenders aren’t visionaries. They rely heavily on the mysterious algorithm known as a credit score.
If your (or your business’s) credit score is too low, you’ll be systematically dismissed. Work to get your credit score to the minimum needed for the type of loan you’re seeking.
Lack of credit history
This can affect your credit score.
If you have no credit history, then, in most lender’s eyes, you have bad credit.
Fortunately, it doesn’t take too long to build a credit history. If you do so with on-time payments, a lot of your credit issues should disappear.
A high-risk industry
Lenders want to minimize risks.
If they deem your industry (or business model) high-risk, they will likely decline your loan application. If they don’t understand your industry (or business model), they’ll probably deem it high-risk and decline your loan application.
If you find yourself in this position more thorough market research might help. Plus, you might search for a lender that specializes in your particular industry.
Character issues
A criminal history and/or a bad reputation can result in a declined loan application.
Conviction of a crime involving “moral turpitude” is likely an instant rejection. If you’re unsure, you can speak with a representative of the lender to gauge their stance on your crime.
Infamy as a particularly immoral person, even if not criminal, isn’t going to help your cause either. In instances like this, you’ll likely have to apply somewhere your reputation doesn’t proceed you.
Lack of collateral
Collateral lowers risk for lenders. If things go bad, they can sell the collateral and recoup some of their losses.
However, if you’re securing a startup loan to pay for things like labor, marketing, or research, then there is nothing tangible for them to sell if you default on the loan. Therefore, they’ll see the loan as riskier and the likelihood of your business getting declined increases.
Capacity to repay
Low margins, a poor location, and many other factors can make your financial projections suspect in a lender’s eyes.
Even if you can show that it is possible for you to pay back the loan, that possibility might be based on so many shaky assumptions that the risk is too high to make a startup loan to your small business.
A poor business plan
A well-researched and thought-out business plan sends a strong message. It shows that you have carefully considered the present and future environment of your startup.
Beyond that, if it’s done right, it also serves as a marketing tool for the funding your startup needs to be successful. Every section of your business plan should make a case for loaning your small business the money it needs.
Lack of quality advice
Business is complicated.
It could be that your business is a good credit risk, but, you’re just not able to convey that to lenders. If that’s the case, check with your local SCORE chapter. There may be volunteers with that organization that can help you put your best foot forward.
Giving up
You’ll get declined for every loan you don’t apply for. Rejection can be discouraging, but try to take a lesson from it and make improvements where needed. Don’t keep banging your head against a wall.
Also, if you’re going to pitch your business, show some enthusiasm. Business revolves around selling and your startup’s potential is the first thing you have to sell. If you’re not pumped about your startup’s potential, then go back to the drawing board and refine it until you are.
Do you need to get a business loan for your startup?
It technically isn’t necessary to secure a loan to start a business. But, if you want to start a business, there’s a pretty high likelihood that you’ll need one.
Understanding your options and the loan process will help you decide what kind of debt financing is right for you. It will also help you to be prepared and increase the chances of your approval.
The funding request section of the business plan is where you bring together everything else you laid out in the previous sections.
Those other sections stated why your business will be successful and how successful it will be. But, the funding request section is where you communicate how much help you’ll need to be successful. Beyond that, it shows why your burgeoning small business is a good investment.
The funding request section relies heavily on the startup’s financial projections. Therefore, in this funding request example, I will refer to the same hypothetical business as I did in the example financial projections – a restaurant startup called Diner, LLC.
As a reminder, in the financial projections example, forecasted a capital budget, five years of operating budgets, and five years of financial budgets to lay the groundwork for this funding request. Therefore, I won’t include the actual financial projections in this example so as to not be redundant.
This example funding request, like the example financial projections, is built off of these two previous posts:
As outlined in the financial projections section, Diner LLC. is expected to achieve profitability quickly – within its first year of operation. Furthermore, it’s expected to continue to increase in financial health for the foreseeable future. Diner, LLC. respresents a prudent investment for small business lenders.
In order to realize it’s potential, outside funding is required.
Total pre-launch cash expenditures are estimated at $255,233.
Mr. Restaurantmanager, the sole-member of Diner, LLC. is committing $51,047 (20%) of the total launch costs.
This leaves $204,187 (80%) in funding needed to launch this venture.
Funding details for startup restaurant costs.
Funding is requested in the form of debt financing only.
Ideally, these funds would be lent through the SBA 7(a) Small Loan program at or near a rate of 6.00% APR. This is representative of the current terms of the prime rate (3.25%) + 2.75%.
The term of the debt financing is expected to be 10 years and to be repaid in 120 monthly installments of approximately $2,266.89.
No outside equity financing is being sought at this time. Mr. Restaurantmanager would remain the sole-member of Diner, LLC.
At the conclusion of the five-year financial projections, it is anticipated that the debt financing will be paid down to an approximate principal balance of $109,066.
At which point, it is undecided whether the business will be sold, expanded, or maintained as-is. With cash and other current assets anticipated to be valued at approximately $312,333, enough liquid capital will be available to pay the debt financing in its entirety – regardless of what course of action is chosen.
The financial projections section of your business plan is where you forecast your sales, expenses, cash flow, and capital projects for the first five years of your small business’s existence.
This is a critical section for readers of your business plan. It tells them:
How you expect your startup to perform financially
When you expect your new business to be profitable
How profitable you expect it to be
These are things you’d want to know as an investor, right? It’s up to the reader to decide whether they think your forecast is feasible.
Additionally, as an entrepreneur, it forces you to consider, thoroughly, what the first five years of business might look like. This will give you a good plan to work off of, will help you to be proactive, and will increase your likelihood of success.
Finally, the financial projections are the foundation of your funding request. Of course, your funding request, after all, is the primary purpose of your business plan.
Without knowing how much cash you need to launch and operate early-on, you won’t know how much you need to ask for. The funding request relies heavily upon financial projections, particularly the capital budget.
An example of a funding request, for this same business, will be posted separately.
This example of financial projections is built off of two previous posts:
Download the restaurant financial projections spreadsheet
If you’d like to download the spreadsheets I used to make these financial projections for a restaurant that can be done below. Keep in mind that these were (hastily) built off of budgets for a manufacturing company and tweaked for the restaurant industry. However, they should serve as a good starting point.
Complete the form below and click Submit. Upon email confirmation, the workbook will open in a new tab.
Startup restaurant financial projections
The financial projections for Diner, LLC provide a well-thought-out, cohesive, and comprehensive forecast of the restaurant’s performance from initial funding through the fifth year of operation. These forecasts will validate the feasibility of the concept and the appeal of an investment in this venture.
The financial projections for Diner, LLC include an initial capital budget for all of the fixed assets and other costs necessary to launch the restaurant.
Additionally, five years of pro forma income statements are included. These pro forma income statements are built off of a detailed five-year operating budget.
Furthermore, five years of pro forma balance sheets are also included. These pro forma balance sheets are built on five years of detailed cash flow analysis.
For the purpose of brevity, not every detailed budget is included in this business plan. However, all are available for decision support, upon request.
Items in italics represent those directly referenced in the financial projections.
Startup restaurant capital budget
The capital budget summarizes Diner, LLC.’s forecasted operational and cash flow results over the next fifteen years. It takes into account:
Fixed assets needed to operate the restaurant
Launch costs necessary to begin operations
Cash-on-hand needed to launch the restaurant
To cover unanticipated expenses
Fixed assets necessary to operate Diner, LLC. are estimated to cost $157,500.
The salvage value after fifteen years is estimated at $23,625.
On average, all assets are assumed to have a depreciable (and useful life) of fifteen years.
Fixed assets will be depreciated using the straight-line method.
The effective tax rate, for purposes of calculating a depreciation tax shield, is estimated at 21% throughout the capital budget.
A discount rate of 10% is used to calculate NPV and other capital budgeting metrics. This discount rate considers the cost of borrowing (6%) and adds an additional risk premium of 4%. 6% is the estimated interest rate for an SBA 7(a) Small Loan and is calculated by adding 2.75% to the current Prime Rate (3.25%).
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Initial Additional costs include launch costs that can’t be depreciated. E.g. professional services, organization & development costs, and other pre-opening costs.
Additional costs for Year 01 through Year 05 are pulled directly from the operating budget. Additional costs for Year 06 through Year 15 are assumed to grow at a rate of 3% per year after Year 05.
Additional revenue for Year 01 through Year 05 is also pulled directly from the operating budget. Additional revenue for Year 06 through Year 15 is assumed to grow at 3% per year after Year 05.
Over the course of fifteen years, the Summary of the capital budget shows:
Net present value (NPV) of $194,167
Internal rate of return (IRR) of 22%
Modified internal rate of return (MIRR) of 14.4%
Payback period of 3.71 years
Profitability index of 1.79
It’s worth noting that if the restaurant were to be sold at the end of fifteen years, the NPV would be considerably higher – accounting for the proceeds from a sale.
Startup restaurant operating budget
In the operating budget, Diner, LLC.’s sales, ingredients (cost of sales) payroll, and other overhead expenses are forecasted by month. Additionally, annual amounts are shown in a Pro Forma Income Statement. Each individual component of the budget is analyzed and forecasted separately in an attempt to be as comprehensive and realistic as possible.
Restaurant operating budget Year 1
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Year one of operations is characterized by low initial sales that grow quickly throughout the first 12 months of business. The first month of profitability is estimated to be Month six – September 2021.
As such, the Profit margin is very low for the year overall but, it is expected that the year will be profitable.
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The Sales Budget breaks down the expected Unit volume and Dollar Sales for each category of products sold. These categories are:
Entrées
Appetizers
Desserts
Non-alcoholic beverages
Alcoholic beverages
Each individual product in a category will have a different price, of course. However, for the sake of simplicity, items were grouped by category and an average Sales Price is estimated.
Sales prices will initially be set higher than average. At or near the “indifference price point.” At this price point, the number of customers that consider the price a bargain should be close to the number that feel it’s starting to get expensive.
This is done with the hopes that the Diner, LLC.’s novelty, image, and quality will still provide a perceived value for customers. Additionally, pricing as high as practical will help to offset the low initial Unit Sales after launch.
Restaurant operating budget year 2
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Year two of operations is characterized by a leveling off of Unit Sales after reaching near practical capacity at the end of year one.
Additionally, it’s anticipated that Sales Prices will remain the same throughout the year after being on the high side in year one.
However, in spite of rising costs, overall sales are expected to increase significantly due to consistent demand throughout year two.
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As mentioned, most costs, including ingredients, are expected to increase by an average of 3% in the second year.
As with sales categories, for the sake of simplicity, ingredients are grouped together into categories. Their costs represent an average of all the ingredients contained in a category.
Restaurant operating budget Year 3
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In year three, unit sales are expected to continue to remain level. Sales Prices are anticipated to increase by approximately 5% to offset increased costs. Diner, LLC. is expected to have its highest year of profitability yet.
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As was the case in year two, payroll is again expected to increase. This is due to an increase in wages and salaries of roughly 3%. It is Diner, LLC.’s intent to incentivize customer service and quality through above-average employee compensation.
In years one and two, the staff is expected to consist of:
One General Manager and one Assistant Manager, along with Cooks, Waitresses/Bartenders, and Hosts as needed, part-time, depending on sales volume. The General Manager and Assistant Manager are expected to cover any staffing shortcomings.
In year three, however, it is budgeted to add a second Assistant Manager position to relieve some of the responsibilities of the other managers.
Restaurant operating budget Year 4
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With Unit Sales, for all practical reasons, expected to be maxed out, Sales Prices would need to be increased in year four in order to achieve meaningful revenue growth.
As is typical, all costs are expected to increase by 3%, on average, in year four.
One exception is the Rent/Occupancy expense. When operations are initiated, Diner, LLC. is expected to enter into a three-year lease. At the beginning of year four, the lease will have expired and a new lease will need to be signed. A 10% increase in Rent/Occupancy expense is anticipated.
Restaurant operating budget Year 5
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By the end of year five, Diner, LLC. is expected to remain profitable. That is, as long as Sales Prices are kept adequately above costs without sacrificing demand.
In order for the Diner, LLC. to grow from this point, the opening of a new location or another type of expansion would need to take place.
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Startup restaurant cash budget
The cash budget forecasts the timing of cash collections and cash disbursements. This is done in an effort to ensure that Diner, LLC. remains solvent.
Obviously, the nature of the restaurants’ business model is such that cash collections are always made at the time of sale. So, no Accounts receivable are ever anticipated to be on the books.
However, ingredients, payroll, and overhead are not necessarily paid for in the same month but those expenses are incurred. Therefore, the timing of cash flow out will not necessarily correspond with expenses on the operating budget.
The cash budget is where a Desired ending cash balance is specified. Additionally, details on any financing (long-term and/or short-term) and savings account balances are also addressed.
Restaurant cash budget Year 1
In the time leading up to the first month of operation, a considerable amount of money will need to be borrowed by Diner, LLC. to pay for pre-opening expenses. The Beginning cash balance is set at $43,500 in order to offset low initial sales.
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Pre-opening ingredient purchases, payroll, and overhead expenses are estimated and accounted for.
The timing of cash payments is estimated by assigning a % pmt of current (& prior) month for each expense type.
Restaurant cash budget Year 2
The increase in Unit Sales for year two is expected to help turn negative equity positive. Additionally, prudent cash management is expected to contribute to the security and solvency of Diner, LLC.
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Maintaining an Ending cash balance of $24,000 every month puts the restaurant in a position where it doesn’t need to rely on any short-term or long-term financing. It also facilitates the ability to put excess cash into a liquid investment account. This investment account is available to offset negative, unforeseen, events. Or, to put towards future growth and expansion.
Restaurant cash budget Year 3
Year three is expected to see the continued reduction of debt and a subsequent increase in assets and equity. Certain balance sheet items like inventory, Accounts payable, and Accrued expenses are expected to increase in line with increasing costs as outlined in the operating budget.
All ratios at the end of year three are expected to be relatively healthy. At this point, Diner, LLC. is expected to still have a relatively high Debt to equity ratio. This ratio is expected to continue to decrease, however.
Restaurant cash budget Year 4
Throughout year four, assets and equity will continue to grow.
Cash and short-term investments begin to make up a considerable portion of assets.
The year four pro forma cash flow statement offers a different perspective than the income statement and balance sheet. It shows how it’s anticipated to be cash positive from operating activities and how the majority of that cash will be used to pay down debt and put into a short-term investment account.
Restaurant cash budget Year 5
By the completion of the fifth year of operation, equity is estimated to be between $250,000 and $300,000. Cash balances continue to grow at approximately $1,000 per year, in order to account for increasing expenses.
Barring unforeseen events, Diner, LLC. should be expected to adequately cover expenses and to deposit a considerable amount of cash receipts into short-term investments.
This growing investment account will serve as a margin of safety for unforeseen circumstances and/or will allow for expansion or other projects – should that course of action be chosen.
“How do startups get financial projections?” Financial projections for a business plan start with forecasting an operating budget and then a cash budget for the first five years of business. With these budgets, pro forma income statements and balance sheets can be created. Coupled with the inclusion of capital budget(s), an all-around picture of your startup’s financial future will come into focus.
The financial projections section of your business plan is the foundation for the funding request section. It’s also, in part, where you quantify the viability of your business idea. Lenders and investors will be very interested in this particular section. There are three primary components of the financial projection section.
A capital budget for these types of big cost/reward ventures can help you with the timing and amounts of revenue, expenses, and cash flow in the budgets that follow.
The reader of your business plan will appreciate the supporting information Plus, the extra analysis will help ensure that you are spending your funding wisely.
Start with sales
As emphasized in the operating budget template for small biz post, most financial projections start with forecasting sales. Why? Because of the volume of sales you (expect) to make, will drive how much you spend.
In the calculating funding requirements post, the point was made that you should project your financials out for five years. Yes, it’s nearly impossible to accurately predict your monthly revenue several years from now. However, the reader of your business plan will want to know that you’ve at least thought that far out.
Keep in mind that month 1 of your forecast probably won’t be the first month you expect to make sales. Rather, it will be the first month after you receive your funding requirements.
Your first month of sales might come well after that.
Spending money to make money
Now, knowing how much you expect to sell, you’ll have a better idea of what you’ll have to spend to make those sales.
It’s here that it’ll become obvious why you started forecasting after you received your funding requirements. Because, depending on the industry your business is in, you might have to spend a significant amount of your funding just getting set up. For instance, you might need to spend money on things such as:
Licenses, permits, and registration fees
Beginning inventory
Deposits
Down payments on fixed assets
Utilities
Other startup expenses
Plug these expenses into the appropriate months following the receipt of your funding requirements.
Once your pre-launch expenses are forecast, then you can focus on your operating expenses – the ones that will correspond with earning revenue. Different industries will have different costs in different proportions. But, here are some categories of costs to consider as you complete your forecasted operating budget:
Materials
Labor
Overhead (utilities, depreciation, real estate)
Marketing and sales
Administration (accounting, human resources, IT)
Match these costs up with your forecasted revenue and subtract them from that revenue. You should now have monthly estimates of your operating profit for the next five years.
Interest and tax expenses will be deducted from operating profit to arrive at the forecasted monthly net profit.
Remember your capital budget? Don’t forget to account for the revenues and expenses related to your projects and capital expenditures. A capital budget is built on cash flows in and out. So, you might have to adjust the timing of corresponding sales and expenses.
Pro forma income statement
With your revenue, cost of revenue, selling general and administrative expenses, interest expense, and income tax expense estimated, you can now put together yearly pro forma (expected) income statements.
This pro forma income statement will serve as a snapshot of your (hopefully increasing) profitability over the next five years.
Cash budgeting
The cash budget, not to be confused with the cash flow statement, specifies when cash will actually come into and leave your business.
The operating budget stated when you’ll make the sales, but not when you’ll actually collect cash. Some businesses collect cash more or less immediately. Restaurants and retail, for example. Others issue invoices and have to wait to collect cash. Some might even have customers who never pay.
Forecasting sales for the reader of your business plan is important. But, beyond that, they’re going to want to know when you’ll actually collect on the sales. That’s the point of the cash budget.
Why make a cash budget if it’s so similar to the operating budget?
A cash budget tells the reader of your business plan that you take cash flow seriously. That you understand cash must come in quickly and leave slowly – to the extent that it’s practical.
As mentioned, the cash budget is built off of the operating budget.
Just simply adjust all of those sales into the future and enter them in the month you expect to collect cash.
Alternatively, for each expense, adjust it to the month in which cash will actually leave your bank account.
From there, all that’s left to do is make a note of your starting cash. Then, add the cash you expect to collect every month and subtract what you expect to spend. This will leave you with a new cash balance at the end of every month which, in turn, becomes your starting balance the following month.
You haven’t forgotten about your capital budget, right? Those capital expenditures and projects can have a huge effect on cash flow. Make sure they’re being accounted for in your cash budget.
Pro forma balance sheet
The pro forma balance sheet is a snapshot of your company’s owner’s equity for each of the five years forecasted.
With your operating and cash budgets in hand, you have what it takes to calculate your assets, liabilities, and owner’s equity balances at the end of each year.
Admittedly, calculating a pro forma balance sheet can be a little daunting. If you’re not well-versed in accounting you might reach out to someone for help. Alternatively, you can use the Spreadsheets for Business example + template of a small business financial budget for inspiration. The pro forma balance sheet is automatically calculated based on what you enter for the cash budget.
A pro forma cash flow statement is also automatically calculated.
How do startups get financial projections?
The information above outlines the quantified information to include in your business plan.
I would suggest that you accompany each budget and pro forma statement with some qualifying information too.
For instance a written synopsis of why you forecasted what you did. A reasonable narration of your startup’s financial position over the next five years. This will help flesh out your vision of your company’s future and why it would be a smart investment.
The Funding Requirements section of your business plan is where you outline:
How much money your startup is going to need to begin operations and reach self-sufficiency
Whether you are seeking debt financing, equity financing, or both
Any other details regarding how the money will be used, how much will be returned to the financier(s), and when it will be returned
Unless you have a really big chunk of money saved up, you’re probably going to have to do what most other startups do – ask for money. Ultimately, the goal is, of course, to make the business self-sufficient. But, early on, if you want to scale up quickly, you’re probably going to have to leverage someone else’s money.
What would you want to know if you were giving someone money to start a business? Would you want to know how they’re going to use it? How they’re going to preserve it? How about how they’re going to build upon it?
Maybe you’re a lone wolf? You want to keep this operation as lean as possible. Particularly when it comes to people.
I can appreciate that!
Nevertheless, if you’re going to be funding this thing on your own, you still want to hold yourself accountable. You want a plan regarding where your money will be spent, and how you’re going to earn a return on it.
1) Capital, operating, and financial budgets
Starting a business from scratch is not so different from a decades-old business starting a new year. The required tasks are nearly the same.
Writing posts on, and making templates for, strategic planning topics is the foundation of this website. Capital, operating, and financial budgeting is critical to small business success.
The capital budget will specify any projects and/or large-scale assets you intend to buy. Plus, what kind of return you expect on that investment.
The operating budget is where you forecast your first one, three, or five years of operation. Your revenue, your cost of revenue, and your sales/administrative costs. An operating budget leads to the creation of a pro forma income statement.
Finally, your financial budget. This is your cash budget. It specifies when you think you’ll actually put money in your bank account from all those sales you’ll be making. It also specifies how you plan to stay solvent. This budget leads to the creation of a pro forma balance sheet and cash flow statement.
2) Determine funding need
All of the preceding budgets, particularly the financial (cash) budget, show where the money is going to be used. Once you compare the business’ cash needs to the cash you’re contributing, you’ll know how much is required from outside sources.
Budgeting will also show when and how the business is expected to make enough to support itself. Furthermore, other important milestones will be reflected. Milestones such as your first sale, your first $10,000 in revenue, your first $1 million in revenue(?), and so forth.
Can you see how these budgets will serve as a good measuring stick for your business’s launch and growth?
3) Funding details
Now that you know how much outside funding you’ll need to get off the ground, it’s time to really get into the nitty-gritty details.
Step one is to specify how much of the funding will be debt and how much will be equity. If you’re seeking equity investment, you’ll want to outline a proposal dictating what their investment will buy them. Also, how much power that equity investment will wield.
Another important point to clarify is the timeframe. For instance, things such as debt/balloon payments. If you’re really aggressive, there might come a point where you expect to cash out of the business and pay your equity holders
Whatever the case may be, you’re going to be clear about the status of the business at the end of the five-year forecast. Plans can change, of course, but you’ll want to include an exit strategy for those who are investing in you.
Finally, you should consider building on step one (budgeting) and clarify how the debt/equity funds will be used. Will it be for fixed assets, marketing, other operating expenses, or something else?
What are business funds?
Business funds are used by the business for their financial requirements. A business needs money to run. It is the oxygen that fuels its operations.
Starting a business is not cheap. To fund your new company, you’ll need some money upfront and this can be one of the first financial choices made by entrepreneurs when they start their own enterprise. But it’s also an important decision that could have lasting impacts on how your structure and run your business over time.
There are a variety of sources to turn to if you’re looking for small business funding. Capital may come in various forms like loans, grants, or crowdfunding.
Before you seek out funds, make sure to have a solid business plan and a clear outline of how the money will be used. Investors want assurance that their investments are being well managed so they can invest with confidence in the company’s future success!
What are funding requirements in a business plan?
This is what your entire business plan has been building up towards.
If you follow these steps for calculating funding requirements, don’t you think you’ll have an enormous amount of insight as you launch your startup?
This is the culmination of all the hard work you’ve put into your business plan thus far. Once completed, you’ll know how much money you’ll need, and what you’ll use it for.
Asking someone to invest in your business is like asking for a sale. Fortunately, if you’ve stuck with me this far you’re well prepared to write the funding requirement section of your business plan. I’m sure you’ll get what you need to be successful!
