HOW TO RAISE MONEY FOR STARTING A BUSINESS

    The task of raising money for a business is not as difficult as most
    people seem to think.  This is especially true when you have an idea
    that can make you and your backers rich.  Actually, there's more
    money available for new business ventures than there are good
    business ideas.

    A very important rule of the game to learn:  Anytime you want to
    raise money, your first move should be to put together a proper
    prospectus.

    This prospectus should include a resume of your background, your
    education, training, experience and any other personal qualities
    that might be counted as an asset to your potential success.  It's
    also a good idea to list the various loans you've had in the past,
    what they were for, and your history in paying them off.

    You'll have to explain in detail how the money you want is going to
    be used.  If it's for an existing business, you'll need a profit and
    loss record for at least the preceding six months, and a plan
    showing how this additional money will produce greater profits.  If
    it's a new business, you'll have to show your proposed business
    plan, your marketing research and projected costs, as well as
    anticipated income figures, with a summary for each year, over at
    least a three year period.

    It'll be advantageous to you to base your cost estimates high, and
    your income projections on minimal returns.  This will enable you to
    "ride thru" those extreme "ups and downs" inherent in any beginning
    business.  You should also describe what makes your business unique
    - how it differs from your competition, and the opportunities for
    expansion or secondary products.

    This prospectus will have to state precisely what you're offering
    the investor in return for the use of his money.  He'll want to know
    the percentage of interest you're willing to pay, and whether
    monthly, quarterly or on an annual basis.  Are you offering a
    certain percentage of the profits?  A percentage of the business?  A
    seat on your board of directors?

    An investor uses his money to make more money.  He wants to make as
    much as he can, regardless whether it's a short term or long term
    deal.  In order to attract him, interest him, and persuade him to
    "put up" the money you need, you'll not only have to offer him an
    opportunity for big profits, but you'll have to spell it out in
    detail, and further, back up your claims with proof from your
    marketing research.

    Venture investors are usually quite familiar with "high risk"
    proposals, yet they all want to minimize that risk as much as
    possible.  Therefore, your prospectus should include a listing of
    your business and personal assets with documentation - usually
    copies of your tax returns for the past three years or more. Your
    prospective investor may not know anything about you or your
    business, but if he wants to know, he can pick up his telephone and
    know everything there is to know within 24 hours.  The point here
    is, don't ever try to "con" a potential investor.  Be honest with
    him.  Lay all the facts on the table for him. In most cases, if
    you've got a good idea and you've done your homework properly, an
    "interested investor" will understand your position and offer more
    help than you dared to ask.

    When you have your prospectus prepared, know how much money you
    want, exactly how it will be used, and how you intend to repay it,
    you're ready to start looking for investors.

    As simple as it seems, one of the easiest ways of raising money is
    by advertising in a newspaper or a national publication featuring
    such ads.  Your ad should state the amount of money you want -
    always ask for more money than you need so you have room for
    negotiating.  Your ad should also state the type of business
    involved (to separate the curious from the truly interested), and
    the kind of return you're promising on the investment.

    Take a page from the party plan merchandisers.  Set up a party and
    invite your friends over.  Explain your business plan, the profit
    potentials, and how much you need.  Give them each a copy of your
    prospectus and ask that they pledge a thousand dollars as a
    non-participating partner in your business.  Check with the current
    tax regulations.  You may be allowed up to 25 partners in Sub
    Chapter S enterprises, opening the door for anyone to gather a group
    of friends around himself with something to offer them in return for
    their assistance in capitalizing his business.

    You can also issue and sell up to $300,000 worth of stock in your
    company with out going through the Federal Trade Commission. You'll
    need the help of an attorney to do this, however, and of course a
    good tax accountant as well wouldn't hurt.

    It's always a good idea to have an attorney and an accountant help
    you make up your business prospectus.  As you explain your plan to
    them, and ask for their advice, casually ask them if they'd mind
    letting you know of, or steer your way any potential investors they
    might happen to meet.  Do the same with your banker.  Give him a
    copy of your prospectus and ask him if he'd look it over and offer
    any suggestions for improving it, and of course, let you know of any
    potential investors.  In either case, it's always a good idea to let
    them know you're willing to pay a "finder's fee" if you can be
    directed to the right investor.

    Professional people such as doctors and dentists are known to have a
    tendency to join occupational investment groups.  The next time you
    talk with your doctor or dentist, give him a prospectus and explain
    your plan.  He may want to invest on his own or perhaps set up an
    appointment for you to talk with the manager of his investment
    group.  Either way, you win because when you're looking for money,
    it's essential that you get the word out to as many potential
    investors as possible.

    Don't overlook the possibilities of the Small Business Investment
    Companies in your area.  Look them up in your telephone book under
    "Investment Services."  These companies exist for the sole purpose
    of lending money to businesses which they feel have a good chance of
    making money.  In many instances, they trade their help for a small
    interest in your company.

    Many states have Business Development Commissions whose goal is to
    assist in the establishment and growth of new businesses. Not only
    do they offer favorable taxes and business expertise, most also
    offer money or facilities to help a new business get started. Your
    Chamber of Commerce is the place to check for further information on
    this idea.

    Industrial banks are usually much more amenable to making business
    loans than regular banks, so be sure to check out these institutions
    in your area.  Insurance companies are prime sources of long term
    business capital, but each company varies its policies regarding the
    type of business it will consider.  Check your local agent for the
    name and address of the person to contact.  It's also quite possible
    to get the directors of an other company to invest in your business.
    Look for a company that can benefit from your product or service.
    Also, be sure to check at your public library for available
    foundation grants.  These can be the final answer to all your money
    needs if your business is perceived to be related to the objectives
    and activities of the foundation.

    Finally, there's the Money Broker or Finder.  These are the people
    who take your prospectus and circulate it with various known lenders
    or investors.  They always require an up-front or retainer fee, and
    there-s no way they can guarantee to get you the loan or the money
    you want.

    There are many very good money brokers, and there are some that are
    not so good.  They all take a percentage of the gross amount that's
    finally procured for your needs.  The important thing is to check
    them out fully; find out about the successful loans or investment
    plans they've arranged, and what kind of investor contacts they have
    - all of this before you put up any front money or pay any retainer
    fees.

    There are many ways to raise money - from staging garage sales to
    selling stocks.  Don't make the mistake of thinking that the only
    place you can find the money you need is through the bank or finance
    company.

    Start thinking about the idea of inviting investors to share in your
    business as silent partners.  Think about the idea of obtaining
    financing for a primary business by arranging financing for another
    business that will support the start-up, establishment and
    development of the primary business.  Consider the feasibility of
    merging with a company that's already organized, and with facilities
    that are compatible or related to your needs.  Give some thought to
    the possibilities of getting the people supplying your production
    equipment to co-sign the loan you need for start-up capital.

    Remember, there are thousands upon thousands of ways to obtain
    business start-up capital.  This is truly the age of creative
    financing.

    Disregard the stories you hear of "tight money," and start making
    phone calls, talking to people, and making appointments to discuss
    your plans with the people who have money to invest. There's more
    money now than there's ever been for new business investment. The
    problem is that most beginning "business builders" don't know what
    to believe or which way to turn for help.  They tend to believe the
    stories of "tight money," and they set aside their plans for a
    business of their own until a time when start-up money might be
    easier to find.

    The truth is this:  Now is the time to make your move.  Now is the
    time to act.  The person with a truly viable business plan, and
    determination to succeed, will make use of every possible idea that
    can be imagined.  And the ideas I've suggested here should serve as
    just a few of the unlimited sources of monetary help available and
    waiting for you!