Chapter 22: Getting Financed

Contrary to popular belief, business plans do not generate business financing. True, there are many kinds of financing options that require a business plan, but nobody invests in a business plan. Investors need a business plan as a document that communicates ideas and information, but they invest in a company, in a product, and in people.

Small Business Financing Realities

Venture capital financing is very rare. I'll explain more later in this chapter, but start with the assumption that only a very few high-growth plans with high-power management teams are venture opportunities.

Banks don't finance business start-ups. I'll have more on that later, too. Banks aren't supposed to invest depositors' money in new businesses.
Business plans don't sell investors.

In Fundamentals: Pick Your Plan, I said the plan matches the needs of the company. So does the process of looking for money. Where you look for money, and how you look for money, depends on your company and the kind of money you need. There is an enormous difference, for example, between a high-growth Internet-related company looking for second-round venture funding and a local retail store looking to finance a branch store. In some of the following sections of this chapter, I want to talk more specifically about the types of investment and lending available.

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