Investor Question

Discussion in 'Growing and Managing a Business' started by Arcaign, Apr 14, 2010.

  1. Arcaign

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    Feb 26, 2009
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    Our company has taken the first step in our next stage and is getting a professional business plan put together. I have 2 questions.

    1. Is is viewed as standard practice to incorporate a salary into the amount requested as to work the business on a full time basis?
    2. What would be the best course of action to find investors once the business plan is finished?

  2. Fergal

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    Nov 18, 2007
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    I was listening to Duncan Bannatyne from the UK Dragons Den recently, he was saying that investors don't like seeing their money being spent on the business owner's salary. His concern is that if the business experiences difficulties at some time in the future, there will be nothing to show for the money invested in the owner's salary. Investors like to see their money being spent on things directly related to the business, such as manufacturing and sales and marketing.

    If at all possible, it's probably best to avoid paying yourself a salary from the business, for the first year. If you do need to pay yourself a salary (as most new business owners do), show it in the figures and keep it as low as possible, for the first year at least.

    Speaking of Duncan Bannatyne, I'd highly recommend his book "Wake Up And Change Your Life" for anyone planning on starting a new business. You can buy it from his website, from Amazon or Audible.

    When setting up the business keep your overheads and expenses as low as possible, then invest as much as you can, in the business yourself. Next consider bank funding - approach your personal bank with your business plan. If they are not prepared to invest, get as much feedback from them as you can. Find out why they won't give you a business loan and make changes to your plan and presentation, before approaching another bank.

    Also keep in mind that there might be other sources of funding in your area, such as government grants. Do you know of any government business support agencies in your city or state? Contact them, ask what they can do to help your business and ask if they can recommend any funding options for you.

    Good luck with it and please post back with your thoughts.

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