What You Should Know About Capital Raising

By: Wade Henderson


Before starting operations you must be as realistic as possible to estimate the amount of capital needed to initiate and sustain the company during its first three to six months. This will be initial investment and next you do your capital raising.
It is important that you include a financial cushion when you are doing your capital raising plans. The reason for this is the fact that in the early stages of the business your income will not be higher or equal your expenses. Having a reserve fund will allow you to cover for things as crucial as payroll, debt to suppliers, loans, etc. Remember to take all of this into consideration in your capital raising plans.
Capital raising considerations should include a provision for all those invisible operation costs. Many entrepreneurs fail to see the some many hidden expenses that added up become great costs. For example, safe deposits, or loan fees, or estimated sales taxes, etc.
When doing your capital raising you must also consider your personal financial needs. Not just the company needs capital to survive the first months of operation, the owner is also required, to be precise, the estimated initial investment must include an adequate margin for the owner while you work at the company. This margin can be in the form of salary or retirement privileges.
Capital raising for retail businesses or industries includes other expenses. In order to do your sales estimates think about how many customers you could realistically have in one year. You may try different scenarios. Use the size, type and location of your business to help you. Some people find it easy to do small questionnaires as forms of market research. The information that you collect will be valuable sooner or later.
We can consider various sources when doing capital raising for the company. The choice depends on how they are going to use the money in the company and the level of ownership to be retained.
If you decide to use capital from a bank for instance. You need to think about the interest rates you will be paying. The larger the amount you need, the higher the interests and the least you will have for other expenses. You may have no other choice though, but quote the machinery or equipment you will buy efficiently.
In on the other hand you can potentially get an external investor. Capital raising can be done through venture capital. An external investor that will give funding to the company in exchange for shares that he or she will later sell to a better price.

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Wade Henderson - recognized Professional - 15 yrs in the Business Finance Field - strong reputation for getting the deal done. IMMFinancial.com capital raising private equity capital

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