Resources and Funding
Needed Funding and Business Plan
Before asking investors for money, it is an imperative to know how much money to ask for. It would be unprofessional to pitch a great business plan and when asked how much money is needed for the inventor to say, "Good question! Just work with me!"
Chris Mankle, an executive at Hewlett Packard Co., has received funding for numerous business ideas. In his experience, before investors will even consider lending money, you better have a solid financial plan accounting for every penny that needs to be spent and why.
Inventors in search of financing may be happy to know that angels and venture capitalists are still out there writing checks, but they're no longer interested in business plans scribbled on a napkin. In order to capture the attention of potential investors, the inventor must create a business plan to show how much money is needed, how much money is going to be made, and how the investor will benefit. A business plan offers a glimpse into the past, present, and future of the company. By reading an inventor's business plan, potential investors should have a very clear picture of what will happen with there money, and why. Therefore, the most important section of the business plan is the financials.
The financials section of an inventor's business plan should show the first three to five years of operations which include all expenses, revenue, and profits. This offers an opportunity for investors to show their return on investment (ROI), return-on-assets (ROA), and Internal Rate of Return (IRR). Another important factor is the burn rate, or how fast the investor's money will be spent and how long it will last.
If a large amount of money is needed, investors will not give the entire sum of money to the company at one time. They split it up into "rounds" of financing in order to ensure the start-up is using the money efficiently. It is important to know how many rounds of financing might be needed to get the business running, products manufactured, and a profit coming in. It is easiest to receive funding with only one round of financing. This way, investors do not need to monitor business operations closely, and more freedom is given to the inventor.
If the inventor can show potential investors that he/she has a solid idea, and financials meet expectations, money can be raised to fund manufacturing. With funding, the trip to market may continue.
Paper outline
- Protecting inventions
- Manufacturing the product
- Getting resources and financing
- Testing the market
- Preparing products for market
- Closing thoughts
- Download the entire paper
Check out the Silent Timer Web site to see the product Erik took to market. Contact him with any questions.
