The Defining Dozen: #10 – Where’s the startup money coming from?

Learn how to answer the tenth of the "Defining Dozen" questions – Where’s the startup money coming from? – so you can write an effective business plan.

In Step 3 of "10 Steps to Open for Business," answering the “Defining Dozen” questions is vital to writing a good business plan. The Sloan brothers describe them in detail in StartupNation: Open for Business, their book. Here is the tenth of those questions, in a special book excerpt:

Where’s the startup money coming from? By answering No. 9, you’ll learn two of the most important things you’ll need to know when answering Question No. 10. You’ll learn how much money you need and how much you think you’re going to make. Now start thinking about where to get the capital to get your business off the ground. We’ll go into detail on this in Chapter Six, but in this prep stage, consider sources such as banks, friends, family, and angels.

If you plan on getting your money through venture capitalists, determine a valuation for your company. More often than not, as in the residential real estate market, the valuation of your company will be heavily influenced by the value of comparables—valuations of companies at a similar stage of development with similar characteristics. Knowing the valuation helps you figure out how much of the company’s equity you’ll have to provide in return for the capital influx.

Excerpted from StartupNation: Open for Business Copyright© 2005 by Jeff Sloan and Rich Sloan. Excerpted by permission of Doubleday, a division of Random House, Inc. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.

Learn more about the Sloan brothers’ secrets to business success – buy the book StartupNation: Open for Business now.

Total
0
Shares
Previous Article

What is the best small business elevator pitch in the pitch-off? You tell us!

Next Article

What is your time worth when you aren’t managing your small business?

Related Posts
virtual assistant
Read More

How Virtual Assistants Can Benefit Startup Leaders

According to venture capitalist Bill Trenchard of First Round Capital, the average startup founder "works about 300 days a year, 14 hours a day." He should know. Trenchard cofounded and led three companies and, as a VC, advises hundreds of startups. "Looking at the schedule of a typical CEO, a full 70 percent of that...
find a new accountant
Read More

5 Signs It’s Time to Find a New Accountant

As a business owner, you likely want to do whatever you can to keep your company’s finances in check. This is why it’s imperative to work with an accountant that you can trust and count on to maximize your enterprise’s financial health. Whether you have an in-house bookkeeper or you outsourced all of your bookkeeping...
succession planning
Read More

Your Business Legacy: Why Succession Planning Is a Crucial Step in Estate Planning

Running your own business is a mammoth task and a considerable investment. Statistics have consistently shown that small business owners have to work longer and harder than the average employee. So, after dedicating so much time and energy to building up a company, it’s crucial to protect it should the worst happen. Almost all of...
supply chain
Read More

How to Keep Vendors and Clients Happy During Supply Chain Hiccups

Supply chain breakdowns are happening due to global disruptions, rising costs and increased consumer expectations. Businesses can't always stop supply chain hiccups, but they can learn from them and limit their impact on vendors and clients. How a business responds to a supply chain issue can have far-flung effects. A company that is proactive and...