If you're cheap, opt instead for Directory of Venture Capital, by venture capitalist Catherine E. Lister and entrepreneur Thomas D. Harnish (John Wiley & Sons, 800-225-5945, 1996, $34.95). You'll get a crib sheet of useful background on more than 600 large venture-capital firms and small-business investment companies across the country. While this book lacks the sophistication and exhaustive scope of Pratt's massive tome, it does include some useful sample documents.
Jill Andresky Fraser is Inc.'s finance editor. Research assistance was provided by Cheryl McManus, while other members of the Inc. staff provided additional reporting.
WHAT'S A SINKING FUND, ANYWAY?
Don't panic. You too can learn to speak financialese
You don't need to be a financial whiz to realize that bankers and investors speak a different language from the rest of us--and that most of them seem to like it that way, since it keeps power squarely in their courts. One effective way to strengthen your position as a seeker of capital is to learn their lingo. Here are two surprisingly accessible and comprehensive dictionaries: Dictionary of Finance and Investment Terms, by financial journalists John Downes and Jordan Elliot Goodman (Barron's Financial Guides, 800-645-3476, 1995, $11.95), and Dictionary of Banking Terms, by Thomas Fitch (Barron's Business Guides, 800-645-3476, 1997, $12.95). Buy whichever one fits your current financing quest. If you spend just an hour or two leafing through some of the thousands of entries, you'll improve your ability to talk to potential backers.
MAKING YOUR CASE
How to sell to investors
Sometimes, running a company seems simple compared with the pain and suffering involved in presenting your company to prospective investors. Unless you're a born salesperson, you could probably use some savvy advice. Turn to Winning Strategies for Capital Formation, by Linda Chandler (Irwin, 800-722-4726, 1997, $32.50), a business consultant who claims to have raised more than a billion dollars for an impressive list of companies. As you'll see, Chandler is obsessed--for good reason, we might add--with the importance of a good presentation. "Your job is to convey your passion, conviction, competence, vision, reliability, determination, and teamwork capacity," she tells business owners. Better still, she goes on to advise them how to accomplish that mission in both 15-minute and 2-minute pitches. Whether you're making your pitch to a banker or to an investor, you'll benefit from her firm suggestions about eye contact, body language, and word choices.
WHY THEY SAID NO
Maybe it was your business plan
Here's the hard truth: you'll have a hard time attracting capital if you don't keep good financial reports--or if you don't know how to prepare an effective business plan. So consider these resources:
- Managing by the Numbers: Financial Essentials for the Growing Business, by former entrepreneur and banker David H. Bangs Jr. (Upstart, 800-235-8866, 1992, $19.95), is one of many guides that aim to teach nonfinancial executives how to manage their growing businesses. But it happens to be one that we really like because it's accessible, comprehensive, and full of lots of good examples. If you're uncertain about whether your company's financial reports are good enough to wow potential investors or lenders, it pays to pick up this book--or one like it.
- www.once.com/gcg takes you to an Internet version of a 302-page guide written by Clinton Richardson. (In its print life, the book was called The Growth Company Guide to Investors, Deal Structures, and Legal Strategies.) The site offers good tips on writing an effective business plan, including a sample format. Also worth exploring: sections on bridge loans and deal terms, as well as links to other Web sites.
SPECIAL REPORT: HOW TO FINANCE ANYTHING
