Financing Your Dream Reference Guide

Topics What is Capital?

Addressed Are You Ready to Get Capital?
Understanding What You Need Capital For
Where to Find Capital
Understanding Debt
Understanding Equity
Making the Ask

Capital is a word that you’ll hear a lot and it means money or assets.

If you plan to launch a business, you might need money to get started. Or, if you
already own an existing business, you might need money to invest in things like
equipment or property… things that will help your business grow. There might
even be times when you need funding to pay a supplier.

You’ll likely have a need for outside funding at different times throughout the life
of your business.
Define Your Goal
Entrepreneurs start businesses for different reasons. Some are looking to create
a certain lifestyle for themselves, others are looking for a way to build wealth and
status. Social entrepreneurs get started to solve a problem they see in society.
And many entrepreneurs simply want to find a way to make money doing
something they love.

Before you pursue capital, you should clearly define your reason for starting your
business in what is called a Statement of Purpose. This will act as a guiding
statement to help you make the right choices for you when accessing capital.

For example, is your goal to create a top web site design company? Your
statement of purpose might look like this.
My goal is to create an award-winning website design company.

Or, are you creating a business that you can hand down to your kids?
I will create a business that I can hand down to my kids.

Or if you’re starting a business so you can create an app that helps women stay
safe while walking at night, your statement might look like this.
Through my business, I will develop apps that help women stay safe while
walking at night.

Have You Done Your Homework?

There are many questions you are probably asking yourself as you think about
finding capital. To answer any of these questions, you’ll need to understand your
business’s financial health today. You’ll need to do your homework, understand
what your strategy is, or will be, and have good financial records prepared.
You should be sure to have a well-thought out business plan before
looking for funding.
Understanding your businesses’ financial profile is also very important. If
you are already operating, you’ll need to have full financial statements,
such as an Income Statement, a Balance Sheet, and a Cash Flow
Statement. You should also understand some of the key business ratios,
such as your break-even point and your profit margin.
If you haven’t started your business yet, you’ll want to have your projected
startup costs and sales calculated.
You’ll also want to have a clear picture of your personal financial profile as
that may be taken into consideration for financing.

Use the checklist called Have You Done Your Homework? from the
Resources section of your DreamBuilder account to help you figure out if
you’ve done all your homework and are ready to move forward.
The Life of Your Business
You also need to understand where you are in the life of your business. Your
business will pass through many stages of growth before becoming mature.
Knowing the stage that your business is in will be key to understanding where
you should look for money and the kind of capital that you will need.

There are six stages that your business may fall into:

Established Established &

Consideration Pre-startup Startup Early Stage
&Growing Non-Growing

Determining the Not Operating Consistently Has consistent Operationally

specifics of the generating and making making a profit financial mature
business sales sales performance
Committed to Has enough Currently either
Not yet 100% starting Not customers and Earns average stable or in
committed to consistently can keep them or above decline
starting Taken steps earning a satisfied average profits
to formalize profit Either content
the business Mindset is, “I Have systems with the size of
May not have know my and the company
a set strategy business will procedures or the business
work” firmly in place needs to
Mindset is, “I refocus
think my Needs a deeper Experiencing
business will understanding growth
work” of financial
position

Entrepreneurs in the Consideration stage may still be determining what the

specifics of their business will be and have not made a one hundred percent
commitment to starting.

A business in the Pre-Startup stage is not yet generating sales, but the
entrepreneur has made a commitment to starting. The entrepreneur has taken
the steps to formalize her business. At this stage, she is thinking, “I am going to
start my business to make additional income.”

Startups are businesses in operation, making sales, but not yet consistently
earning a profit. The business may not yet have a set strategy. At this stage, the
entrepreneur’s mindset is, “I think my business will work.”

An Early stage business is consistently making a profit and has enough

customers that it keeps satisfied. At this point, the entrepreneur can say with
confidence, “I know my business will work.” The challenge at this stage is
establishing organization and systems to understand all the influences on her
financial position.
An Established and Growing business has consistent financial performance
and earns average or above average profits. These businesses have their
systems and procedures firmly in place. They are experiencing growth, such as
sales, product lines, new employees, or markets.

Established and Non-Growing businesses are operationally mature and while

they may have experienced growth in the past, they are currently either stable or
even in decline. It’s not necessarily a bad thing for a business to be in this stage.
Some entrepreneurs reach a stage where they’re content with the size of their
company. Other times, this stage may be a sign that a business needs to refocus
or it risks dying.
Not All Capital is the Same
Throughout the life of your business, your company will use money in different
ways. And depending upon what your business needs, you’ll use different types
of capital.

Not all capital is the same. There are different types available and each kind has
different costs and characteristics. The different types of capital are generally
defined by whether you have a short-term need, or want to make a long-term
investment. You’ll also look for different kinds of capital if you’re already running
your business rather than if you’re just beginning.

Many new businesses will first need money for startup costs. These costs may
include startup expenses, startup assets, or initial operating costs.

Use the tool called Startup Costs from the Resources section of your
DreamBuilder account to help you estimate your startup costs.

Working Capital and Growth Capital

If your business is currently operating, there are two common types of capital:
Working Capital and
Growth Capital.

You’re likely to have a variety of capital needs over the life of your business, so
it’s important to know the difference.

If you need money to fuel your business operations now, you’ll be looking for
Working Capital. This kind of capital usually fulfills a short-term need that the
entrepreneur has in running her day-to-day business.
For example, an entrepreneur may be looking for working capital if she
needs to buy the raw materials for a new big order, or if she hasn’t yet
been paid by a customer but needs to pay her suppliers or her employees.
Working Capital gives the business owner some short-term support to get
through a temporary shortage of money.

Growth Capital on the other hand is used when an entrepreneur wants to make
an investment in her business to build the long-term capacity of the company.
Some good examples of Growth Capital are buying bigger equipment,
investing in property, or costs that come with expanding into new markets.
Making investments in the hiring and training of new workers can also be
considered Growth Capital.
How Much Do You Really Need?
Even if you know the kind of capital you need, you still must figure out how much
money you require. Many entrepreneurs make the mistake of asking for capital
without really knowing how much they need. Therefore, it’s important to do your
homework first. Be sure to understand your finances and seek out advice from
people you trust so that you know exactly how much money you’ll need.

Sources of Information
You need to do your research first. There are many places you can find
information that will help you to determine exactly how much you need, including:
Other entrepreneurs and people in your industry,
Trade associations,
Online articles and guides,
Suppliers,
Business assistance centers, such as the Small Business Administration,
Certified accountants and bankers, and
Paid consultants.

Use the list called Capital Estimator from the Resources section of your
DreamBuilder account to start to determine your capital needs.

Bootstrapping
You should always start by asking yourself if there are creative ways to operate
your business with less money. This technique is often called bootstrapping. It
means finding ways to get things done with what you have.

Some ways that you could bootstrap your business might be to borrow
equipment instead of buying it. Or, working with your suppliers to negotiate a
longer time to pay back your bills. You can also re-evaluate if you need to make
certain purchases right away, like putting off the purchase of expensive
brochures.

If you can find ways to be thrifty without hurting the performance of your
business, you’ll save money in the end.
After you’ve identified what you need funding for, where do you find the money?

Look Inward
When looking for sources of funding, the first place an entrepreneur should look
is in the mirror. Before asking other people for funding, look at what money and
assets you own that you can use for your business. After all, if you aren’t willing
to spend your own money for your business, why would someone else spend
theirs?

External Sources
It’s likely that even after exploring the possible funding you have personally, you’ll
likely still need to find outside capital. Where else can you go?

There are five main places to look:

Family and Friends.
o Many new entrepreneurs ask their family members or close friends
to help provide funding.
Banks and other Financial Institutions.
o One of the most commonly thought of places to find funding is
through a local bank, a micro-finance provider, government-led
programs, or other financial institution.
Investors.
o An entrepreneur may look for an individual or organization that is
willing to provide funding in return for owning part of her business.
Grants and Contests.
o There are people and organizations that want to support
entrepreneurs so much so that they give funding away through
grants and contests. Non-profits, governments, schools, and
philanthropists may make money available to entrepreneurs
through competitions as a way to identify and support those
businesspeople who will make the largest impact in their
communities.
Crowd Funding.
o One of the newest places to find funding is through online crowd
funding. Several websites ask individuals to make small
contributions towards funding a larger goal for the entrepreneur.
One type of crowd funding is called lending circles, where
borrowers join in a group to lend to each other. There are many
varieties of crowd funding, but there are some areas where it is not
yet widely used.
Choose What’s Best for You
You’ll often use multiple sources of funding throughout the life of your business.
Some sources are more appropriate for different stages of the business.

However, not every source of capital will be right for you. Some sources may
offer you funding with high interest rates or bad terms. For example, many
entrepreneurs will use a credit card, not realizing how expensive it is when you
add up the fees and interest. Credit cards may be easy but they may not be the
best funding option.

The ‘What’s In It for Me’ Factor

When considering your options for capital, you’ll want to understand why
someone would be willing to give you money. This is known as the “What’s In It
For Me?” or “WIIFM” factor.

People who are willing to give you funding are likely doing so because it is in
their own best interest.
A bank or investor is providing money because they hope to make a profit
from the transaction. A bank will earn interest or fees; an investor will have
a stake in your future profits.
Non-profits, governments, schools, and philanthropists may provide grants
and contest awards in the hopes that they will see a positive social impact
in their community.
People who support crowd-funding projects may expect a “reward” or
recognition in exchange for their contribution.
Even your family and friends have a “What’s in it for me” factor for giving
you money; they want to support you and see you be successful.

Agreements
Anytime that you receive money from someone else, there will be an agreement
between you and the person giving you the funding that outlines what the rules
are.

You will both want to clearly define the expectations of your deal. This will include
things like whether you must pay it back, if there are any extra costs, and if you
have to give up any ownership in your company. Even if your deal is with a family
member or friend, you will want to have a written agreement.

In all cases, be sure to carefully read the document before you sign it! If you don’t
understand what it says, get someone who can help you understand it. Once you
sign it, you will be held to those terms.

Also, be aware that there are some people who may try to take advantage of
you. There are lenders who operate illegally or unethically. You might find people
who pretend to offer money but it is really just a scam. Be on the lookout for
these situations and stay away from them. If it sounds too good to be true, it
probably is!

Three Categories of Capital Agreements

There are three general categories that most capital agreements fall into:
1. Debt
o With debt, you take on a liability and will owe the person or
organization lending you the money. You’ll have to pay them back.
Oftentimes, you’ll also need to pay additional fees or interest for the
opportunity to use someone else’s money.
2. Equity
o With most Equity capital, you aren’t required to pay back the money
as you would with Debt. However, you’re giving up part of the
ownership of your company in return for the funding. You’ll be
selling part of your company in return for the funding you receive.
3. Gifts, Grants, and Awards
o These sources of capital don’t require you to pay back the money,
don’t charge a fee, and don’t require you to give up ownership.
However, there can be other obligations that come with receiving
this kind of capital, such as providing reports or agreeing to be used
in marketing.
o An example of this kind of capital might be if a friend or family
member gives you money for your business as a gift. Often, grants
and competitions also fall into this category. There are even some
kinds of crowd funding where the donors don’t expect any return
payment for their contribution. Gifts, grants, and awards are often
small amounts of capital and are usually pursued by businesses in
the Consideration or Pre-Startup phases.
o You shouldn’t plan your financial strategy relying solely on this kind
of funding. But, if you can get it, go for it!

The stage your business is in and what you need the money for will determine
what type of capital is most appropriate for you.

Use the chart called Stages of Business from the Resources section of
your DreamBuilder account to see the most common types of financing for
each stage of your business and the pros and cons of each.
Types of Debt
Debt is capital that you must pay back. With debt, there are many kinds of
financial agreements you may have with a lender. You might hear these
agreements called “Debt Instruments.” For most entrepreneurs, there are a few
common kinds of debt that you will see, such as loans, lines of credit, leases, and
factoring.

The most important thing to know about these debt instruments is that they are
not all used in the same way. You need to match your business’s need to the
kind of agreement that will work the best. You will want to consider things like
what you will use the money for, whether you need the money for short-term or
long-term needs, and even the kind of business you are running.

Be sure to talk to your lender about your debt needs to make sure that you are
choosing the right kind of debt instrument for your business.

Basic of Loans
When most entrepreneurs hear the word debt, they immediately think of loans. A
loan is an amount of money that is given to someone for a set amount of time,
with the expectation that it will be paid back.

There are many types of loans and, depending on from whom you are borrowing
and for what purpose, the conditions of the loan may be very different. However,
there are some things they all have in common.
Every loan agreement outlines the amount of money you’re borrowing,
How long you’ll be using that money, and
How much you’ll pay for the use of that money.
Many lenders also require a Personal Guarantee, which outlines what
assets you’re willing to give the lender if you’re unable to repay your loan.

Learning the Loan Lingo

There are some basic terms that you’ll need to understand when borrowing
money.
The principal is the amount of money you borrow.
The term of the loan is the length of time you are using that money.
The reason the lender is making a loan to you is to earn a profit, therefore
they will expect some kind of payment in exchange for letting you use their
money. Usually, a lender will charge you a percentage of the total amount
you borrowed. This percentage is called the interest rate.
In addition to interest, fees are other charges that a lender may charge
you for using their money.
Most loans are made by banks; however, they can also be made by specialty
financial institutions, such as a micro-finance provider, or may even be made by
groups of people, which is the case for crowd-funded loans.

Loans can be made by individuals. You may even receive a loan from someone
you know. Sometimes you can get loan assistance from an organization
connected to the government. In the United States, the Small Business
Administration is a great resource for entrepreneurs seeking capital.

Keep in mind that principal, the term, and the interest rate all affect the total cost
of your loan and how much you’ll regularly pay.
For example, if you borrow $10,000 at 8% over a 7-year term, you would
pay $155.86 monthly and the total cost of your loan (not including fees) is
$13,092.42.
If, however, you borrow $10,000 at 6% over 5 years, then your monthly
payments would be $193.33, and the total cost of your loan is $11,599.68.

Lines of Credit
With a line of credit, a borrower is approved for a set amount of money that she
can draw upon over a specific period. Once it’s fully withdrawn, the borrower
pays back the money over another specific period.
For instance, an entrepreneur may take out a line of credit for $25,000 to
buy several pieces of equipment over a year. When the year is done and
the entrepreneur has used the money to buy her equipment, she would
then have a certain amount of time to pay that money back to the bank.

There is also a kind of line of credit called a revolving line of credit. With this
kind of revolving line of credit, you don’t have to use the entire amount you’re
approved for and you only make payments on the funds you use. It is referred to
as revolving because as you pay back the funds, you can repeatedly access the
account without reapplying. With this kind of debt, the borrower has the flexibility
to use what she needs, when she needs it. But, it can be expensive. The interest
rates are often high, so they should only be used for short-term needs and
should be paid back as soon as possible. A revolving credit line can have time
limitations applied.
A credit card is an example of a kind of revolving credit account. Many
entrepreneurs use credit cards at the start of their businesses because
they are convenient. But credit cards often charge high interest rates,
costing the entrepreneur more to use them. As well, they can be risky,
especially if you are using your personal cards.

Leases and Factoring

If you need capital to obtain an asset, such as a vehicle, a building, property or
equipment, a lease might be a good option. A lease grants you the right to use
something without owning it. At the end of a lease, you return the item to its
owner.
For businesses that are currently operating and generating sales, another way to
raise capital is through something called factoring. In factoring, a business sells
the right to collect on outstanding invoices for a discounted rate. It can be a way
to quickly raise funding when a loan or credit is not available. But it’s a method to
use with caution because it has higher costs and you’re selling the right to
someone else to contact your customers to request payments.

Uses of Debt
If you are just starting up your business, you’ll likely be using personal resources,
or funding from family and friends, in the beginning. You may also get small
amounts from grants or micro-finance organizations. Some government
programs could also provide support.

Once your business is operating, you may need short-term funding to fuel your
business now; that is Working capital. For Working capital needs, short-term
loans, lines of credit, and factoring may be options.

Longer-term funding for growing the future capacity of your business is Growth
capital. For Growth capital needs, longer-term loans and leases may be more
effective.

One last piece of advice: be sure to consider the responsibility you have, to pay
back your loan and the potential downsides to default.

The Lender’s Point of View

As you consider pursuing Debt capital, it’s helpful to first consider the lender’s
point of view. If you’re borrowing from a family or friend, their goal might simply
be to help you because they like you. But if you’re going to a professional lender,
such as a banker, their primary goal is to make money. Lending money is their
business.

For the lender, every loan that they give involves making a calculated risk.
They’re betting that you’ll repay them what you owe, in the time that you
promised. If they’re wrong, then they’ll lose money.

The Five ‘C’s’

Most lenders rely on something called the Five C’s of Credit. These are:
1. Capacity,
2. Capital,
3. Collateral,
4. Conditions, and
5. Character.

By weighing these five factors, lenders decide who gets a loan and who doesn’t.
Capacity
Capacity refers to the borrower’s ability to pay back the loan. A lender will be
considering how likely it is that you have the cash flow or other resources that will
allow you to make your payments.

Capital
A lender also wants to know how personally invested you are in your business.
They want to know how much of your own Capital you have put in. If you haven’t
invested much of your own money, the lender may be less likely to invest their
money.

Collateral
Collateral is an asset that you offer up to the lender as security that you will pay
back the borrowed money. If you stop paying on a loan, the lender can take the
collateral to fulfill your financial obligation. When making a loan, lenders are
looking for what items you may have of value that can be used as collateral.
Property, buildings, equipment, inventory, a savings account, other financial
investments, or even jewelry are all examples of things that might be used as
collateral. If you have money that customers owe you, your accounts receivable,
that may also be used as collateral.

If you don’t have collateral to offer the lender, it may be more difficult to get a
loan. You will have to be creative and focus on the other “C’s” or consider
alternative forms of capital.

Conditions
A lender is also going to look at the Conditions in which a business is operating.
They may consider the economic, industry, or environmental situation that would
influence the entrepreneur’s ability to repay the loan. Select the banker to learn
more about conditions.

Character
Perhaps the most important C that a lender considers when deciding whether to
make a loan or not is Character. They want to know how reliable the borrower is,
what kind of reputation she has, and if she can be trusted.

A banker’s favorite saying is “Character pays back loans.” They know from
experience that if a person has a strong character, they will be more likely to do
everything possible to pay back their obligation to the bank.

Character is easily checked by looking at the entrepreneur’s personal financial

history.
Does she pay her bills on time?
Does she have a huge balance on her credit cards or have other loans
that have not been paid?
It’s incredibly important for an entrepreneur to have good personal credit. In
some countries, individuals have personal credit scores that are assigned by
credit agencies.

Getting Your Credit in Order

If you don’t have a good credit history, your first goal is to start fixing that right
away. Create a system to start paying your bills, paying off personal debt, and
even seeking professional advice on how to repair your credit. Sometimes you
may even be able to build up your credit profile by taking small loans and paying
them back on time.

If you can’t show a lender that you can manage your own money, they aren’t
going to let you have any of their money.

Sharing Your Story

Another critical part of Character is sharing your personal story. Your personal
story matters. Think about how you are telling your story.
You’ll want to explain how you came up with your idea,
Why it matters to you, and
Your experience.

Work hard to communicate your vision and passion. Let your banker see your
commitment to your business.

Building Your Reputation

Your reputation with others is also important. You never know whom a lender
might know that also knows you. It’s important to invest time in building your
network and professional relationships.

Don’t be afraid to join organizations, attend networking events, and reach out to
other professionals in your community.

When I first started my business, I didn’t invest much time in building my network.
I was already balancing my family and my business. I didn’t have time to go to
networking events. But I’ve since realized that having a network of supporters
can help me get things accomplished and build my reputation. Your network is
important; don’t ignore it!

Building Relationships
Perhaps the most important relationship to build is the relationship with your
lender. Ideally, by the time you go to get a loan, you’ve already gotten to know
your lender. This might be through your personal banking or through community
events, or even through a referral from a trusted friend.
Creating a relationship with your lender not only lets them know you better but
also helps you know them better. Like any long-term relationship, it’s important to
know if you like and trust your lender.

Stay on Top of Your Business Needs

As an entrepreneur, you will likely always have some form of debt as you build
your business. The kind and amount will change as your company matures. It’s a
good practice to occasionally review your obligations, needs, and debt choices
so that you are using the kind of capital most suited for your business.
What is Equity?
Equity is another form of capital. Equity refers to the value of the ownership of
any asset after all the debts are paid off.
For example, if you own a car that is worth $5000 and you have
completely paid off your car loans, the equity of your car is $5000.
But if you have a car worth that same amount but you still owe the bank
$1000, your equity in that car is only $4000.

For an entrepreneur, equity means the value of her company. If you are the sole
owner of your company, your equity is the value of the business, minus any
outstanding debt that you have in the business.

Working with Investors

Some entrepreneurs will get funding by selling part of their business to someone
else. Sometimes these agreements bring more than money to the entrepreneur.
An investor may also provide contacts and other resources. The best
agreements will include both financial support and expertise to the business
owner.

Ownership of the business means control of the business. By selling part of the
ownership, you are giving up part of the control.
If you sell 50% of your business, you are giving up 50% of the control.

Having control means having the right to make decisions about how the company
is run. If you sell 50% of the ownership of your business to someone else, that
person has an equal right to make decisions in the business, unless you have
made an agreement otherwise.

Giving Up Ownership
When you give up part of your ownership, you are also giving up part of the value
of your company. And this is not just the current value, but also the future value.

As your business grows, the value of that slice of ownership that you sold will
also grow. 50% of a business worth $100,000 is a lot less than 50% of a
business worth $10 million.

Therefore, Equity capital is often said to be the most expensive kind of capital.
You might be selling something today that could be worth a lot more in the future.
This is the “WIIFM” for investors. They see your company as something that will
grow in value and they are betting that the money they give you today will
multiply in the future.
Investors Take Many Forms
Investors take many different forms. You might have a single person who wishes
to be an investor. This might even be a friend or family member. An individual
may want to be a partner and have a say in the daily decisions of your business
or they may allow you to run the company’s routine operations but only share the
profits.

Regardless of who an investor might be, it’s critical that you create a clear
agreement that explains what the investor expects for his or her money.

An entrepreneur may also have multiple investors. There are groups of people
who work together to make investments. There are also organizations that exist
only to make investments in promising companies. For many entrepreneurs who
are in the early stages of their business, it’s unlikely that they would find funding
through these investing groups or organizations. It’s more likely that they would
have a relationship with an investor that they know, if any investor at all.

Learning the Equity Lingo

If you’re pitching your business to investors, it’s important for you to be familiar
with some common terms.
Seed capital is the initial capital that is used to start the business. This
usually comes from the entrepreneur herself or from friends or family.
An angel investor is a person who provides capital to a startup or small
business. Angel Investors are usually investing because they believe in
the person behind the business. They are often more focused on seeing
the entrepreneur succeed than making huge profits.
A Venture Capitalist, or VC, is the opposite of an Angel Investor. A VC
invests in high potential startups for the sole purpose of achieving a big
future pay off. These are high-risk gambles, but investing early in the next
big thing could mean a lot of money.
Private equity refers to formal investment organizations that finance
larger, more mature companies through big investments.

Do Your Homework
It’s extremely important that before you consider any kind of partnership or other
investment in your business that you do your homework. You need to understand
exactly how much your business is worth before selling any part of it.

All the money, time, and resources you’ve put into your business is building its
value. Even if you are not paying yourself, the hours you spend working on the
business can be considered valuable “sweat equity” and should be considered
when determining the worth of your company.

You also need to make sure you share the same vision and values as your
investors. Be certain to establish a partnership agreement that clearly defines
roles and responsibilities of all owners. Also, when seeking a partner, you will
want to understand what the investor expects to receive financially from the
business and when.

Never sell off equity of your company blindly. There are many potential side
effects, such as how it may affect taxes, which should be considered. For a
decision as important as this, be sure to seek out expert advice. Talk to a
financial advisor or visit a business center. Non-profit organizations or a
government agency such as the SBA are also likely to have experienced
advisors who can help you.
Go For It, Just Ask!
The single most important piece of advice about finding funding is to ask for it!

Sometimes women are hesitant to ask for the money they need. They are
uncomfortable with the process and may doubt themselves. Research has shown
that women are less likely to ask for money when they need it than men are, and
they often ask for less than they actually need. Be aware of any self-doubt and
negative thoughts that enter your mind. One of the best ways to address doubt
and fear is to be prepared.

Making the ask may not be easy to do and it can make you feel vulnerable, but
it’s critical if you want to be successful. Select the photo of the banker for advice
about making the ask.

How to Get Comfortable Asking for Money

There are four basic things you can do to feel more comfortable making the ask.

1. Before you ask for funding, prepare yourself. Be sure to do your

homework. Get your financial information together and know your
business details. You must be able to speak knowledgably about your
income statement, balance sheet, and cash flow statement and be able to
confidently answer questions about these documents.
As you are preparing to “pitch” your need to a lender or investor, you
will want to make sure that you understand the format of the meeting.
To whom will you be talking and what are their expectations?
Is there a time limit?
Are there certain documents that you will need to prepare or have
with you?
2. Find a good friend and practice asking. Getting comfortable with what you
will say ahead of time will make the real thing easier. As well, a good
friend can also challenge you to make your ideas stronger.
3. A pep talk can also do wonders in getting you ready. Sometimes you just
need someone to cheer you on. Find those people who can give you a
morale boost and talk with them before you go.
4. And finally, yet importantly, show that you are a professional. First
impressions are important. Plan ahead to be on time, dress professionally,
and have all your paperwork prepared and organized.
Organize Your Ask
Use this model will organize your thoughts and create confidence in your
abilities.

It touches on four key areas:

1. Personal Commitment
You'll want to explain what steps you have already taken to make this
business idea happen. For example, share information about your
business plan, your prepared projections and financial statements, and
how much you and your friends and family have invested. If you’ve
secured a domain name, built a website, or formally registered your
business, also be sure to share that information.
2. Personal Knowledge
Explain why you are uniquely qualified. What have you done to become
an expert? Some ideas may be that you assembled a knowledgeable
team or found advisors, talked to local business owners in the same
industry, worked with a mentor, and researched the industry.
3. Business Performance
What proof can you show that the business idea is sound?
If your business is running, this will be things such as your sales, your
profits, the number of customers, and other performance indicators.
If your business is not running, then this can be projections and market
research, but be prepared to defend them.
4. Established Systems
Explain what processes you have set up to help you manage your
business and attract customers. For instance, these could be accounting,
employee records, inventory, or customer records.

Use the worksheet called Prepare the Ask from the Resources section of
your DreamBuilder account to help you work through this.