5 tips for properly financing a business creation project

 Any project - business creation or takeover - generates financial needs. Their amount depends on the size of the project, its characteristics and the ambitions of the founders. They must be fully funded so that the business does not experience difficulties in starting up. However, several sources of funding exist and they must be combined in a certain way so that the assembly is balanced and deployed. Here are 5 tips that will allow you to properly finance your business creation project :

  1. Learn about the different sources of funding

  2. Determine your financial needs as precisely as possible

  3. Bring enough money to your business

  4. Make a proper business plan

  5. Prepare your appointments and have someone accompany you if necessary

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Find out about the different means of professional financing

There are many sources of funding . They are generally grouped into two main families: internal funding and external funding . In the first category, we find your personal contributions as well as those of your associates. The possible contributions of investors will also integrate the equity funds of your company. In addition, once the activity is launched, the profits not distributed by your company will be capitalized and will be able to self-finance your investments.

The second category essentially comprises indebtedness , in the broad sense of the term. These are the professional bank loan (borrowing) and professional micro-credit . It also includes rental and leasing which will allow your business to have a property without having to buy it and in return for the payment of rents / royalties. Finally, aid and subsidies , granted under conditions by the State, local authorities or certain organizations, can strengthen the financial capacity of your company.

New modes of financing, such as crowdfunding , have complemented the range of possibilities. The crowdfunding comes in different solutions: Lending crowdfunding (refundable equity loan) Reward-based crowdfunding (grants no special consideration) or Equity-based crowdfunding (investment against delivery of shares). For more information on this subject, do not hesitate to consult this file, written by our teams: financing solutions for a business creation .

Evaluate your financing needs as well as possible and do not underestimate your working capital

Before thinking about how you are going to finance your business creation project, you must precisely estimate the financial need it will generate. The latter includes not only investments in durable goods (in general, the equipment necessary for the operation of the professional activity) but also the need for working capital (which results, when it comes to the operating cycle and corresponds the amount to be financed to manage the time lag between disbursements and receipts).

The resources provided must be adapted to the nature of the need financed and in particular to its horizon (short, medium or long term). Long-term investments must, for example, be financed by bank loans or contributions to social capital. Current account contributions can, for example, finance the purchase of initial stocks (goods, materials, supplies, etc.). A relay loan, repayable after a few months, can allow you to finance your VAT credit on investments.

You should know that the bad estimate of the need for financing is one of the main causes of the disappearance of created companies. Underestimating the financing needs of your project to limit your debt results in starting the activity with financial difficulties ... Then, to ensure that you finance your needs correctly, you must establish a financing plan . This table puts your needs in opposition to the resources you plan to contribute. We cover this part in the fourth tip (see below).

Contribute personally to your project and bring enough money

Studies show that start-up financial investments strongly contribute to the success of the project. In addition, they promote the sustainability of the company. The more resources are important, the more the company has a chance of surviving and passing the fateful “milestone” of five years. In general, internal financing is rarely sufficient to fully finance a business project. You will probably have to seek outside organizations to complete the financing of your business creation.

However, you must know that your project will be likely to interest them only if it presents - in particular - a certain financial balance . This presupposes, of course, that you properly finance the needs, but also that you personally put your “hand in your pocket”. It is generally estimated that a project leader must provide, at a minimum, between 20 and 30% of the overall financial need generated by his project. You will therefore have to find equity , if necessary, to reach this minimum amount.

You can dip into your personal savings . But there are other sources as well. There is, for example, the loan of honor which can be attributed to you personally. You can also ask for money from your family circle ( love money ) or settle your rights to unemployment insurance by requesting the payment of aid for the creation and takeover of a business ( ARCE ). Finally, the last solution is to apply for a personal loan. This strategy presents some risks, however, and is generally unlikely to be successful.

Take the time to make a business plan or, at the very least, a financial forecast

The business plan often scares business creators. Some of them even go so far as to neglect it. And yet, he brings a lot. It represents a real common thread for your project. Its uses are numerous / Above all, it allows you to ensure the profitability of your project. Thanks to it, you will also be able to measure the income that you can potentially derive from your business. This will ensure that the "game is worth the effort" and that you come out on top as a personal winner .

A business plan has two parts : an economic part (which presents the project) and a financial part (which figures the project). Making a business plan can take time, but the lessons you learn from it are going to be very beneficial. Also note that, depending on the nature of your project, the financial part may be more than enough. This is then referred to as a financial forecast . It is made up of a set of financial tables: income statement, balance sheet, cash flow statement, financing plan, etc.

Several solutions are available to you to carry out your business plan or your financial forecast. You can do it yourself, by downloading a business plan template or registering with online business plan software , or have a professional accompany you. As such, Le Coin Des Entrepreneurs provides you with a digital application that allows you to write your business plan for free . It contains many tools, guides and files that will help you design this document. 

Prepare for your interviews and have someone accompany you if necessary

To succeed in your meetings and obtain your funding, you will have to convince your interlocutors. To do this, you must effectively prepare for your interviews . Establish a roadmap, put together a PowerPoint slide show and above all practice speaking. Simulate interviews with your loved ones (family, friends, etc.). On “D” day, wear the right outfit, be polite and keep smiling!

You can go alone in search of financing, but you can also choose to be accompanied by a professional. The support of an accountant is generally beneficial in the sense that his supervision of the file will give credibility to your presentation. The intervention of a specialist consultant can also bring you a lot and fill a gap. Finally, using a professional financing broker generally allows you to obtain better financing conditions .

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