A Hitchhiker's Guide to Capital Resources
A listing of books and Web sites that can help you find financing. Topics include private investors, bank loans, debt, economic-development programs, factoring, and going public.
Published February 1998
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We know what you want: money. No doubt you'd like to get your company as quickly as possible from its current cash-strapped condition to one in which it is flush with cash--preferably cash that comes with as few strings attached as possible. But before you venture into the capital markets, it pays to evaluate your options realistically. With that in mind, we've searched for the best resources to help you assess the wide range of financing methods used by growing companies. Whether you're approaching a high-powered venture-capital firm or Mom and Dad, the odds are that there's a resource here that can help you prepare. To further ease your search, we've arranged this information alphabetically, by topic.
ANGEL INVESTORS
Fantasizing about divine intervention from an angel investor? For a dose of reality (as well as plenty of practical suggestions about how to make a deal happen), try Finding Your Wings: How to Locate Private Investors to Fund Your Venture, by investment banker Gerald A. Benjamin and writer Joel Margulis (John Wiley & Sons, 800-225-5945, $34.95). It includes a useful analysis of what private investors look for in angel deals, as well as a valuable section on the due-diligence process. (The book's checklist of sample questions may scare off some entrepreneurs--but those folks probably wouldn't be the strongest contenders for angel financing, anyway.)
These days an increasing number of networks try to help entrepreneurs link up with private investors. To get a feel for how that works, explore the recently launched ACE-Net service, sponsored by the U.S. Small Business Administration's Office of Advocacy. It's an on-line listing service that seeks to connect entrepreneurs with potential investors.
BANK LOANS
For some business owners (especially those whose companies are start-ups), qualifying for bank financing can seem as unlikely as winning the lottery. For tips on improving your odds, try The Small Business Insider's Guide to Bankers, by entrepreneur Suzanne Caplan and banker Thomas M. Nunnally (Oasis Press, 800-228-2275, 1997, $18.95). This 152-page paperback does an excellent job of explaining how to search for the right bank and fine-tune the perfect loan proposal.
For many business owners, all that matters is winning bank financing, whatever the cost. But if you're negotiating from a stronger position, it makes sense to try to keep your borrowing costs down. That's where chapter 16 of Save Your Business a Bundle, by entrepreneur Daniel Kehrer (Simon & Schuster, 800-223-2336, 1994, $22), should come in handy. It suggests eight tactics that business owners can use to control their banking and finance costs. You won't buy a book for 10 pages' worth of information? Then check this one out at your local library. It's likely that you'll benefit from at least a couple of the tactics highlighted.
If you nurture your banking relationship, you should be able to expand your company's borrowing limits and branch out into new types of financing arrangements as they become appropriate. Borrowing for Your Business: Winning the Battle for the Banker's "Yes," by longtime banker George M. Dawson (Upstart, 800-235-8866, 1991, $19.95), does a bang-up job of advising business owners about building a relationship with bankers and planning early for loan renewals. Supplement Dawson's book with Inc.'s August 1997 article "The Art of the Covenant," which addresses the importance of negotiating for the right loan covenants.
BARTER
A good introduction is Barter Basics (Barter Advantage, 212-534-7500, free), a quick guide to business-bartering arrangements. You might also want to visit the Web site maintained by the National Association of Trade Exchanges or call the group at 216-732-7171. Finally, back issues of Inc. contain specific bartering tips that entrepreneurs can use to help fuel their companies' growth. Some samples: " How Swap Deals Pay Off," " Documenting Swap Deals," " Barter: Credit Lines with a Twist," and " A Customer Can't Pay His Bill. Any Suggestions?."
