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2.8 Action Items
To grow, you'll have to craft a financing solution that meets your needs
as well as your investors' needs. Investors are looking to balance risk
and reward. You will be looking for the right mixture of short-term and
long-term obligations, and of equity and debt financing.
You've got to be creative. Look at traditional sources such as banks,
internal sources such as your own accounts receivables, and, of course,
external risk capital. The right solution may be a package of financing
from different sources, including:
Risk Capital Long-term Financing
Conventional Long-Term Financing
- Term Loans
- Leasing
- Mortgages
Risk Capital Short-Term Financing
- Asset-Based Lending
- Factoring
Conventional Short-Term Financing
- Bank Line of Credit
- Supplier Credit
The following checklist will help you to:
- assess your understanding of the ideas covered in this Step;
- gauge your progress; and
- plan your company's approach.
| Activities |
Status? |
Target Date? |
Responsibility? |
Prepare your financing needs and financial projections so you can
use them as a basis for discussion with possible investors. |
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Meet with your bank and other conventional sources of financing
to determine how much funding you can expect from them. |
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Consult with an investment advisor and legal counsel on funding
options available to you. |
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Investigate if your company is eligible for government assistance
through tax credits on research and development, or other sources. |
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Consider your funding from a contractual and operational point of view. |
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How much should be funded:
- internally?
- through conventional external sources?
- through risk financing?
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How much should be funded with:
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Consider the pros and cons of:
- equity participation; and
- subordinated debt investment.
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