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How to Set up a Fundraising Event

How to Set up a Fundraising Event.

Whether you want to get involved in activism or you need to raise money for a cause close to you, a fundraising event is a fun and effective way to do it. Choose a cause and an event type, then find somewhere to hold the event. Schedule the event and organize all the necessary supplies, services, and staff so you have the logistics taken care of. Market the fundraiser and sell tickets to get people to actually come. On the day of the event, make sure to set up for the fundraiser well in advance to ensure it runs smoothly. Soon enough, you’ll be raising money for something important to you and helping out others!

Part 1 Choosing an Event Type.
1. Define the cause of your fundraising event. Choose a cause or issue that is important to you if you want to raise money for a charitable cause. Write down the reasons you want to raise money if it’s a personal cause, such as raising money for your sports team.
For example, you could choose to raise money for the fight against cancer, the humanitarian crisis in Sudan, or the battle against wildfires in Australia. Pick just one important issue at a time to fundraise for to avoid getting overwhelmed.
If you aren’t sure what you want to raise money for, but you know you want to get involved with fundraising, try talking to organizations in your community. Homeless shelters, veterans organizations, schools, and libraries often need funding, and you'll make a real impact right there in your own community.
2. Set your fundraising goal. Determine the amount of money you want to net, which is the amount of money you are left with after you subtract expenses, by calculating how much you need or want to raise for the cause. Having this number to work towards will help you plan the rest of the event.
For example, if you are raising money to combat wildfires in Australia, you could set a net goal of $10,000 to donate to charities that help that cause. This means that you want to raise $10,000 for the cause plus enough to cover the expenses of the fundraising event.
If you are raising money for something like a sports team, you can calculate how much money you need for things like new equipment or travel expenses to help you set your goal. If you need $1,000 for new jerseys and $4,000 to travel to a tournament, you would set a net goal of $5,000.
It’s best to be completely transparent with your donors and supporters about where the money you are raising will go.
3. Choose a target audience based on who you think cares about your cause. Think about the purpose of your fundraising event and decide if it will be geared towards a general audience or if it will target a more specific audience, such as friends and family of your sports team members, business people, or parents. This will help you choose the type of event and determine who and how many people to invite.
For example, a big charitable cause, like raising money for children in Sudan, can have a large, more general target audience because it is a world issue rather than a local one.
If you are raising money for a more personal cause, like a pet’s veterinarian bills, it would make more sense to limit the audience to family, friends, and close members of the immediate community who the cause is more relevant to.
4. Create a budget. Make a list of all the things you know you will need to spend money on for the event. Include things like staff, event space, food and drinks, invitations, guest speakers or entertainers, and any other items or services that will cost money.
If you don’t know the exact price of everything you will need to pay for just yet, that’s OK. You can make a spreadsheet with all the expenses listed, then fill it in with the estimated costs of each item as you continue planning.
You may be able to get services, items, and even event space donated by local businesses or organizations. Explain to them that you are hosting a fundraising event for your charity and that they can help a worthy cause and get exposure for their business by donating to your event.
5. Select what type of event to hold based on your audience and budget. Choose to hold something traditional like a car wash, a silent auction, or a dinner if you aren’t feeling too creative. Try something different like a race, a water fight, or a dodgeball tournament if you want to do something more unique and fun.
For example, if you're running a fundraiser to benefit your school's band, you could set up a school bake sale or carnival.
Make sure the event is an experience that is fun to participate in. You could have guest speakers, a band, activities after dinner, or anything else you can come up with that will keep guests entertained and engaged. Get creative!
When you’re brainstorming ideas for the event, you can choose between service-based events, like car washes, and competition-based events, like sports tournaments.
Tip: Remember to consider the purpose of the fundraiser, your budget, and the target audience when choosing what type of event to host. For instance, you wouldn’t want to throw a water fight if your target audience is seniors.
6. Find a place to hold the event. Look for large indoor event spaces like schools, wineries, restaurants, or conference centers if your event will be held inside. Search for outdoor spaces like parks or sporting fields if you are hosting an outdoor event.
You could try to find out where other similar events have been held and ask about the availability of those places.

Part 2 Scheduling the Fundraiser.
1. Schedule a date and time. Make sure the space you want to throw the fundraiser in is available on the day and time you want and reserve it. Leave enough time between now and the date of the event for invitees to respond, if applicable.
Don’t schedule your event on the same days as major holidays or other big events to avoid conflicts and maximize the number of attendees.
2. Tour the chosen location’s facilities to plan for the event setup. Make sure there is adequate space and find out what supplies are available to use, if any. Make a map of the space and draw in where different things will go on the day of the event.
For example, if you are hosting a fundraiser at an event space like a conference center, they probably have things like microphones, sound systems, and other electronics available to borrow or rent.
If you’re hosting an outdoor fundraiser, make sure you plan out where things like parking and concession booths will be.
3. Notify the proper authorities and complete any required paperwork. Research online or talk to other people who have hosted fundraisers in your area to find out what permits are necessary. Fill out any required paperwork and pay any fees to ensure your event is legal and avoid any fines or other problems.
For example, if you are holding a raffle, you may need to speak with the gaming authority. If you're selling food, you may need to check with the health department.

Part 3 Organizing the Event.
1. Purchase all the necessary supplies. Refer to your list of items that you made for your budget. Purchase as many supplies as you can ahead of time and make sure you know where to get anything else you need to purchase right before the event.
For example, for a silent auction, you will need things like tables, clipboards, paper, pens, and donated goods and services to auction off.
If you are having a meal at your event, you’ll need things like food, drinks, glasses, plates, and cutlery.
Tip: You can rent larger items that you will only use once, like tables and chairs, from an event supply rental company.
2. Book any services you need for the event. Hire any staff you need, such as security or wait staff. Schedule food service, entertainment, and anything else you need for the fundraiser.
For example, if you want to have live entertainment at the event, book a band in advance. If you want to tightly control entry, hire a security guard to attend the front door. If you are serving food, reserve a team of caterers to supply the food and serve guests.
3. Assemble a team of volunteers to work the event. Talk to friends, family, people you know who support your cause and ask them if they are willing to help out with your fundraiser. Gather enough volunteers to help you with pre-event activities as well as help run the event itself.
The number of volunteers you need depends on how big the event is. You can make a list of all the different roles and responsibilities you want help with to decide how many volunteers you need.
4. Delegate leadership tasks and other responsibilities to your event team. Once you have a team assembled, assign tasks to your team members and make sure everyone understands their particular job or task. Encourage team members to ask Question : s if they're unclear about their assignment or responsibilities.
For example, if you’re holding a silent auction, you might need 1-2 people to help you out with marketing and ticket sales before the event. Then, you might need 1 person to receive donations and handle money on the day of the event, 1 person to direct guests in the parking lot, and 1 person to usher guests to their seats.

Part 4 Marketing the Fundraiser.
1. Promote the fundraising event online. Use social media, email, and possibly a website to market the event. Create pages for the event on Facebook and Instagram to advertise it.
If you’re just doing a one-off fundraiser, it might not make sense to go to the effort of creating a website for the event. However, if you see yourself throwing more, it’s worth it to spend the time and effort on creating at least a basic website that you can use as a landing page with information about the event.
Tip: Ask friends, family, and supporters of your cause to promote the event through their social media channels. You could also try asking local businesses if they would be willing to promote your event through their social media.
2. Do email blasts to all your contacts. Create several emails including an initial announcement and 2-3 follow-up emails advertising the event that include links to all the event’s social media channels and information about how to buy tickets, donate, and attend. Send these emails to all your personal contacts.
You can also ask your friends, family, and supporters to forward or send each email to their contact lists as well to spread the word to more people.
3. Use traditional media to advertise the fundraiser. Take out advertising space in a local newspaper if you can afford it or contact the editorial department to try and get news coverage of the event. Reach out to local radio and TV stations to see if they will give your event news coverage.
You could consider other forms of traditional media, such as posters and flyers, but keep in mind that these methods are not very environmentally friendly. Only use them if you deem it absolutely necessary to get the word out.
4. Pre-sell tickets to the event. Use a free website, such as EventBrite, to sell tickets online. Ask local businesses if they are willing to be points of sale for physical tickets and advertise where the tickets are available as you market the event.
You can offer an “early bird” discount to encourage people to buy early.
You can also offer a group discount to encourage people to tell their friends and book in larger groups.
Consider a VIP Early Access event. For example, if you are hosting a silent auction, you can charge extra for VIP tickets that let holders get in to the auction early and scope out the goods. Or, if you're hosting a benefit concert, you could have a pre-concert meet and greet for VIPs.

Part 5 Preparing Finances.
1. Open a bank account if it is required in your area. In many US states, for example, you must establish a bank account for your charity if you want to receive donations from the public. Do some research online to find out if this is necessary where you live.
Put a name on the account to be sure it is clear for tax purposes. For example, if you are raising funds for a child named Susan Baker, who is getting treatments for cancer, name the account something like the “Susan Baker Donation Fund.”
2. Get a lockbox and change if you plan to receive cash and check donations. Store the cash and checks you receive in the lockbox. Keep change in the lockbox as well or have the person in charge of donations keep change in a fanny pack or cash bag.
If you will receive donations by check, print or write a large, clear sign letting donors know to whom the checks are payable that you can place somewhere visible during the event.
3. Acquire the right equipment if you want to receive credit card payments. Get a credit card machine or a mobile payment device, such as Square, that works with mobile phones if you want to receive payments by card.
Be aware that Square has fees attached and credit card companies take a percentage of each sale as payment.
You can also set up a PayPal account to help you take donations.

Part 6 Setting up and Running the Event.
1. Start setting up the day before or very early on the day of the event. There are always last-minute glitches that cause delays, so make sure you start preparing well in advance of your event's start time. Ask if you can set up the day or night before the event if you are hosting it at an indoor space, or get there first thing in the morning to start setting up on the day of the event to make sure everything goes smoothly.
Try to get a team of volunteers to help set up by asking friends, families, and big supporters of your cause if they are willing to come help you set up.
2. Do a practice run of the event with any event staff after setting up. Make sure everyone knows where they are supposed to be during the event and what their responsibilities are. This will ensure the event runs smoothly and there is no confusion among the helpers.
For example, if there is parking at the event, have one of your helpers practice directing imaginary traffic. If someone will be seating guests, have them rehearse how they will do this.
3. Provide clear instructions for guests. Make sure that attendees know exactly where to go and what the function of each space is. Create signs or handouts with details about the event, such as a timeline and a map.
For example, if you are running a silent auction, make large signs specifying where bids can be taken, where people go to pay, and any other necessary information.
Tip: If you need to provide verbal instructions during the event, make sure to set up a sound system and a microphone and test it out before guests arrive.
4. Put someone in charge of receiving and handling donations. Set up a donations table and assign a volunteer to man the table at all times to collect donations and handle the money. Provide them with a lockbox for cash and checks as well as the equipment needed to take any other forms of payment, such as a credit card machine or Square system.
Make sure that you have someone watching the money and donations table at all times. If the main person in charge needs to get up and go to the bathroom or something, ensure that someone replaces them temporarily.
5. Engage with guests during the event. Be positive and energetic. Ask guests if they are having a good time and if they have any feedback. Let them know how thankful you are for their attendance and generosity.
Think about ways to get guests engaged online, too. For example, you could create a hashtag for the event and ask guests to share their experiences via social media with the hashtag. You could also create an event filter on Instagram and have guests upload pictures using the filter while in attendance.
6. Send thank-yous to supporters and guests after the event is over. Publish general messages of gratitude to supporters, donors, volunteers, and guests on social media as soon as the event is over. Send personalized thank-yous via email to anyone you have the contact info for 1-2 days after the event.
Make sure to include info about how much money you were able to raise and remind everyone what the money will go towards.
Provide any relevant information about how people can continue to support the cause. For example, links to charities that receive ongoing donations for something like world hunger.

Community Q&A.

Question : Can you be too young to host a fundraiser? I am under 13.
Answer : You may need adult help, but you are never too young to do a fundraiser. My daughter did one when she was 8 years old.
Question : What should I write on the flyers?
Answer : You should only write eye-catching key points, such as the name of the events, and what will be offered (Games! Raffles! Food!) etc. Make sure to include the name of who the event is for and the name of who is running it. Possibly include sponsors.
Question : Where can I hold a fundraising event?
Answer : Some options are a local gym, park, church, or community center.
Question : Is selling food a good fundraising event idea?
Answer : Yes, and many organizations have raised needed funds through things like bake sales.
Question : How can I find someone who is a good fundraising planner to plan one for me?
Answer : The internet is usually a good place to start. Make sure to check around and make sure that whoever you're looking at has an established record as a good planner. Feel free to run a quick google search on anything you find. Look for things like customer testimonials and reviews if you can. Remember that the little, less well-known guys are sometimes just as good, so you could try taking a chance.
Question : Can I hold a fundraising event outside?
Answer : Outside events are a great idea as long as the weather is good, and you own the property. If it is on property you don't own, you will need permission from the land owner before you can proceed.
Question : Do I need any legal documents to set up a fundraising event?
Answer : It depends on the specific events that will take place at the fundraiser. For example, if you're holding a raffle or selling 50/50 tickets, you should check with your local gaming authorities. Also, if you're serving or selling liquor, you should look into a liquor license.
Question : What should the decorations be like for a raffle?
Answer : You can put out signs, posters, and other forms of advertisement on the stand you are selling the raffle tickets from. Use lots of color, and, if possible, have the prizes displayed.
Question : Can I hire dancers, musicians and artists for my fundraising project?
Answer : Yes. You have to make sure the performers are appropriate for your event, and make sure you have their payment and any needed materials, supplies or equipment. You may even be able to find some artists willing to donate their time for your cause.
Question : Is it possible to hire volunteers, musicians, dancers, comedians and the like for these events?
Answer : Yes. Ideally, you should try to find entertainers willing to donate their time to support your cause so that you don't spend too much money.

June 25, 2020

How to Start a New Life with No Money

How to Start a New Life with No Money.

Starting a new life can be a great opportunity to make refreshing choices and decisions. However, doing so with no money can present a bit of a challenge as well. To make the most of your new life, start by creating a list of goals and keeping a positive mindset. Learn more about saving and your spending habits. Get a job to bring in additional income and reach out to your friends and family for assistance, if needed.

Method 1 Deciding How You Want to Live.
1. Be clear on why you are starting over. Spend some time determining whether or not you are creating a new life out of necessity or desire. If this is a choice based out of need, then you’ll want to identify what life improvements you will need to make as well. If you are making a decision based out of want, then carefully consider what your ideal life looks like.
For example, if you are starting a new life because you need some space from negative family members, then you might include limiting contact with these persons as part of your plans.
Or, if you are starting a new life because you want a challenge and some excitement, then you might consider placing yourself in a unusual circumstance, such as living in a foreign country.
2. Make any moving plans, if necessary. You may need to move to a new apartment or house in order to truly start over in the same city. Or, you may need to head out of the country entirely. Do as much research as you can online to determine the best way to use your limited funds. Look for locations where the cost of living is cheap and jobs are plentiful.
Find locations with affordable living options by selecting cities and then searching online for rent and food expense estimates. For example, in the Cook Islands you can find an apartment to rent for $130 a month.
3. Decide who to keep in contact with. Starting over can mean severing some personal ties, but it doesn’t always require breaking your bonds with your loved ones. Go through a list of all of your friends and family and determine what place they should have in your new life, if any at all. You’ll also want to consider how you will break the news to everyone that you’ve decided to start over, or if you will just stay silent about your choices.
For example, if you are trying to rebuild your finances and you have a relative who has a tendency to be a bad financial influence, then you will need to determine if you should continue to interact with them moving forward.
4. Keep a goal journal. Spend at least 15 minutes a day writing and thinking about your current situation and editing your goals. Try to create goals for a month, for one year out, for five years out, and for ten years out. Reassess your goals on a regular basis and change them if you need to. Make sure that your goals closely align with what type of life you’d like to lead in the future.
For example, you might write, “I would like to have $500 saved by the end of the year.” This will help you to be more financially stable, so it will likely fit with your lifestyle choices, too,
Make sure to think both big and small when setting your goals. Don’t be afraid to push for a goal that seems a long-shot.
5. Break down each goal into a series of actionable steps. Consider exactly what actions you’ll need to take for each goal and write them down as a sequence. As you decide to tackle that particular goal, look at this list as a reference. This will make larger goals seem more possible. This, in turn, will make you feel more in control of potentially difficult situations.
For example, if you plan to save money, then you’ll probably need to start by monitoring your spending or perhaps opening a savings account.
6. Seek out exciting, new experiences. It can be easy to get bogged down in the unknown or the unusual when you are starting over. Instead, force yourself to use positive adjectives when describing what you are experiencing. Change from using “weird” to “exciting,” for example. If you feel yourself getting too anxious, tell yourself to open your eyes and find one thing positive about your new environment.
For example, try to seek out the natural beauty of an area. Look for how the birds fly in the sky or how the sunlight comes through the trees. If you are stuck in an office all of the time, you can even print out these images and place them around you.
7. Give yourself positive encouragement. Starting over takes time and a great deal of work. Don’t expect everything to be in order overnight. Instead, be gentle with yourself and acknowledge all of your victories, even the small ones. Tell yourself throughout the day, “You are doing good.” Give yourself compliments as often as possible.
It is helpful to see your life as a book. This is just one chapter of many and does not necessarily tell you what the end will be. You are still writing it out.
You will also need to be watchful when you fail, so that you don’t let these moments set you too far off course. For example, if you make a poor spending choice with your limited funds, see if you can correct it as quickly as possible.

Method 2 Rebuilding Your Financial Life.
1. List out your debts. Take out a piece of paper or open up a spreadsheet on your computer. Write down all of the details regarding your debts. Include information about required payment amounts, due dates, and interest percentages. Update this list often and mark off the debts as you pay them off.
This will also allow you to see which debts need to be paid off first and which ones can come later. For example, it is always a good idea to pay off high interest credit card charges as soon as possible.
One entry on your list might look like, “American Express Card, $1,800 balance, 18% percent interest rate, $25 minimum payment per month.”
2. Develop a savings plan. Even without any money at present, it is still a good idea to consider what you will do with cash when you have it. Your goal should be to move away from a lifestyle that involves surviving paycheck to paycheck. This could mean finding a job and moving a certain percentage of pay into a savings account each month. This could also mean spending some time learning about saving on a site such as Learnvest.
There are also some handy spending “tricks” that you can learn, such as setting aside the change from your checking transactions using an app, such as Qapital.
3. Choose a thrifty lifestyle. Make a decision to pursue frugal, but safe, accommodations. If you are moving, select a location that will allow you to live in a thrifty way. Look into the cost of living numbers and consider the benefits of living within a city versus in a rural area, for example. You can also investigate saving money on transportation by forgoing a car.
For example, Panama is one location where you can live comfortably for around $300 a month.
4. Find a job. If do not have a paid position, then look for one by creating a solid resume. It might help for you to list out all of your skills before you begin applying for positions. You could contact a temp agency as well or just browse the job sites on your own. Make sure that you only apply for legitimate work opportunities.
You might also consider putting your skills to work by creating a business.
5. Create back-up plans. Without a financial safety net, there are many moments in life that you will need to navigate carefully. You’ll feel less anxious if you create at least one back-up plan for all of the major decisions and actions that you take. Try to think about both worst and best case scenarios.
For example, if you are saving money by cycling to work and your bicycle breaks down, what will you do? You might want to investigate public transportation as a back-up option.
6. Talk with a financial advisor. Go online and enter your city and “financial advisor.” Then, contact each advisor and ask if they offer any fee-free assistance. If they do, make an appointment and bring all of your financial paperwork with you to the meeting. They may also ask that you attend a financial support group with some of their other clients.
You can also find a forum for financial advice online and ask the members for tips on savings and tracking spending.

Method 3 Getting Help From Others.
1. Take advantage of government programs. Talk to government officials in your area to see if there are any assistance programs available to you. Consider these programs a temporary way to give your finances a boost in order to prepare you for future success. Make sure to follow all guidelines involved with the program.
For example, there are many government grants available to small business owners. Some of these grants can help you to start over with a new business even if you lack the initial funding. Check with the Small Business Association (SBA) for more details.
2. Ask your friends and family for help. Tell your friends and relatives about your goals and your plans to start over. See if they have any suggestions or advice. They might also be able to provide you will additional resources, financial or otherwise, to help you get on your feet.
Be aware that your story and choices may also help others to make positive changes in their own life. For example, you might have a friend who is struggling with credit card debt and could use any information that you learn about paying it down.
When talking to your friends and family members you might say, “I have very little money to work with, but I’m planning to get a job in an industry that guarantees regular pay and insurance as well.”
3. Consider staying with friends. Living expenses can very quickly destroy your budget and ability to save. If you have a friend or family member who is willing to let you “couch surf” for a while, you might consider this as a viable option. It will allow you to save up money and give you enough time to find a living situation that suits your frugal lifestyle.
You may also find that you are not the only person living in someone else’s home, especially in big cities. It is quite common for people to open their home’s to others searching for paid work in crowded, competitive areas.
4. Make lots of professional contacts. Every time that you talk with someone, try to consider how they could work as a professional contact for you. This may sound mercenary, but considering these connections can also make it possible for you to help them as well. When you are out in public, try to talk with the people that you encounter and be friendly as often as possible.
For example, if you are a waiter looking for work it never hurts to talk with the wait staff when you eat out at restaurants. They may be able to give you some tips regarding looking for a job in that area.
5. Talk with a therapist. Go online and enter your city and “therapist” into a search engine. Contact these professionals to see if any of them offer free sessions or group therapy. If so, this can be a great way for you to explore your past choices and how you can make changes for the present. In a support group, you can also find people who can be your friends in your new life.

Community Q&A.

Question : What if I hate my field and would definitely be required to get a degree I can't afford to get to be hired at the very bottom of the only field I think I might not be miserable in?
Answer : Some public libraries and business organizations offer free courses in many fields, with certificates upon completion. They could be classes that would be included to earn a degree and may become transferable college credit. A certificate could be the beginning to getting your foot in the door. Add to the certificate some volunteer work experience in the field. Submit this on your resume and gain contacts from your free certificate training and volunteer experiences that you might want to use for job references. Talk with your new contacts for tips on how they got started. Present all these at the interview for an entry position in your new field of work.

Tips.

When you are starting over it might be tempting to work all of the time, but make sure to give yourself breaks as well

June 02, 2020

How to Prepare a Personal Finance Statement

How to Prepare a Personal Finance Statement.

Preparing a personal finance statement is a great idea. You are trying to get an idea of where you stand financially. You are considering a major life change that will affect your finances. You will need a personal finance statement. You want to start your own business, change careers, retire or travel the world. Prepare a personal finance statement by creating a balance sheet and an income statement that reflect what you have and what you owe.

Steps.

1. Decide what format will work best for you. Most people prefer to use a spreadsheet program such as Excel.

Use a simple pad of paper and a pencil, if you are not good with computers. A handwritten finance statement will be fine if you are the only who will see it.

Consider a software program that might help you prepare a personal financial statement, such as Microsoft Money or Quicken.

2. Create a balance sheet. A balance sheet will show you how much you own and what you owe, giving you an idea of your personal net worth.

Include assets in a column on the left. These will include bank account balances, the amount of money you have in stocks and the value of any property you have.

Place your liabilities in a column on the right. Liabilities will include your mortgages, credit card debt and other loans you are repaying.

Total the amount of your assets and liabilities. Subtract your liabilities from your assets. You will have a snapshot of your net worth.

3. Create an income statement. This part of your personal financial statement will show you how much money you earned and how much you spent.

Add up all of your income, including salaries, bonuses, rental and business income.

Add up all of your expenses, including what you pay in rent, utilities, fees and other regularly occurring bills.

Keep a special column or section for extraordinary occurrences of income or expenses that do not happen on a regular basis. For example, a large tax payment, a sizeable bonus or an expensive home repair might throw off your income statement and can be recorded separately.

Tally the difference between your income and expenses, and you have an idea of what your net income is.

4. Update your personal finance statement regularly. You might want to do it every month or every other month. This will help you monitor any changes in your finances.

5. Include a narrative with the numbers. This will help you remember what was going on during any specific period of time.

Provide a brief description of any special expenses. Mote how you calculated some sums, such as the value of your home.

6. Work with a financial planner or advisor. Ask a professional to review your personal finance statement to see if you have missed anything.

Tips.

Download templates if you are using Excel. You can find a Balance Sheet template and an Income Statement template in the Microsoft Office template library.

Use your personal finance statement for a variety of purposes. You can share it with lenders when you want to get a loan. An attorney if you are considering a major purchase or a bankruptcy and business partners you may consider investing with.

November 28, 2019

how to prepare a personal finance statement

How to Prepare a Personal Finance Statement.

November 25, 2019

How to Finance a Business

How to Finance a Business.

When it's time to finance a business, there can be substantial work involved to facilitate this step. Every small business is different, and businesses in different industries and sectors have different ways of going about getting credit. There are various costs which widely range over the span of particular sectors. However, for the core process of securing the financial assistance that a business owner needs for a start up, some basic guidelines and principles will help create effective programs and a solvent business model. Estimate the costs of doing business, find out what you need to borrow money, and then research your financing options.

Estimating Costs of Your Business.

Determine the one-time costs of your business. These are costs that will only occur at the very beginning of opening your business. These include mileage (getting to a location), market research, advertising, and training. You will also need to look up any fees which will occur, such as a lawyer or consultant fee.

Calculate the recurring costs of your business. These are costs that you will have to pay over and over again, usually on a weekly, bi-weekly, or monthly basis. These include costs of utilities, insurance, wages, etc. Recurring costs are generally larger than one-time costs, and span a length of 10-30 years depending on your financing options. Calculate not only the total cost over the lifespan of your business, but also that on a yearly, and bi-yearly basis.

Ascertain whether costs are fixed, or variable. Fixed costs are those which will not change. The cost of your utilities, or your administrative costs are all fixed. Variable costs are those which will change over time. This includes wages, insurance, and shipping/packaging costs. The best way to keep all this information organized is to create a spreadsheet (use Excel). That way you can graph out this information, and view it multiple ways(bar graph, line chart, etc.).

Create a balance sheet. If you are just starting a small business, it is important that you write out balance sheets, which include: assets, liabilities, and equity. Each of these three categories will help you keep track of the finances of your business, and make it easier to pay your bills.

Assets = current assets(cash, accounts receivable, notes receivable, inventory) + fixed assets(land, building, machinery, furniture, improvements) + intangibles(research, patents, charity, organizational expense)

Liabilities = current liabilities(accounts payable, accrued expenses, notes payable, current long-term debt) + non-current liabilities(non-current long-term debt, notes payable to shareholders and owners, contingent liabilities)

Equity = Assets - Liabilities

Develop a cash flow analysis. This measures money which goes in and out of your business. This is then broken down into operational activities, investment activities, and financing activities. This analysis will help you determine when you break even, and can start reinvesting/expanding your business. Once more, the best way to do this is to create a spread sheet. Find all of your financial statements and gather them together before you start to analyze.

Operational = net income, loses of business, sales, and business expenditures.

Investment = purchases and sales of property, assets, securities, and equipment.

Financing = cash flows of all your loan borrowing and repayment.

Borrowing Money for Your Business.

Use equity financing to start your business. Equity financing usually comes from a primary investor, or other business. They will provide you a sum of money, in exchange for part-ownership of your company. This is a good option because investors look further down the road than a loan company, and you will have more money on hand. However, the investors will naturally want to interfere, and change aspects of your business model.

There are networks online which can set you up with a primary investor.

You can also check out private equity firms, which contain a vast array of specialized and experienced investors.

Remember, that small business owners generally use very little equity financing. It all depends on your business model, and the potential for growth.

Start your business using debt financing. Debt financing is when you take out a loan, usually from a bank or lending institution. This is a great option because the bank will have no say in how you run your business. The loan is tax deductible, and you can get short-term or long-term loans. However, you must have the loan repaid in a certain amount of time, and if you don't, you could have a hard time getting capital investment.

Talk to your local bank, or lending institution about the qualifications for specific loans. You will probably have to fill out some paperwork to determine whether or not you are qualified.

When using a local bank, you may be able to set up a personal relationship. This way, you can postpone a few payments if you fall on hard times.

Find out about credit scores and ratings. The higher your score is, the less risky you are to investors. In many cases, the initial business loan will be based on the borrower's own personal credit score. However, in some cases where a business is already operational, a business plan and other documents can provide for a different kind of credit specifically for the continued operations of that enterprise.

Use the online company TransUnion or EquiFax to determine your credit score. It is important to get an independent analysis, otherwise your own calculated score could be biased.

The main focus of the score is how long you have maintained a credit line, and how many monthly payments you have made on time.

If you have no prior experience taking out credit, it may be hard to get a loan. It is best to start using a credit card on small things like gas, or grocery store trips. Then gradually build up. Show the creditors you are a responsible client.[12]

Maintain an adequate debt to equity ratio. You want to make sure that the total debt and liabilities of your business is no more than four times the equity in the business. Equity simply means any retained earnings and cash injections by investors. In order to start out with equity, the owner of the business usually has to put in anywhere from 20-40%. This will maintain an adequate debt to equity ratio, and allow you to get a loan.

Put up collateral to start your business. Before you get a loan, the lending institution or bank will ask for collateral. This means you risk some of the items you own. In the case you cannot repay the loan, the bank can seize your property. Collateral usually includes homes, cars, furniture, equipment, stocks, bonds, etc. this is a scary proposition, so you need to be sure that your business will be financially successful beforehand.

Shop around for different lenders. There are a variety of lenders who may or may not be willing to issue new business loans, and all of these potential lenders have their own terms and conditions. Talk to various lenders and ask them about what kinds of loans are available. Evaluate loans by timeline. Lenders will offer various short-term, long-term or revolving-credit loans to business owners. Look at which ones suit the needs of a startup the best.

Look at secured and unsecured business loans. Secured loans actually use existing assets as collateral. For example, the person trying to start a business can use his or her home, or other property, as collateral and get lower interest rates for the loan. However, this leaves the assets vulnerable to seizure in cases of nonpayment. Unsecured loans rest solely on the borrower's credit score. See which of these types of loans best matches desired risk.

Select the best deals. You want a loan that has the lowest interest rates and most favorable terms for repayment.

Financing Your Business.

Get a bank loan. Small, local banks have received more strict standards after the financial crash of 2008. However, large investment banks such as JP Morgan Chase and Bank of America have received a set of moneys from the Federal Reserve to lend out to small businesses. This is your best option to go with, although it takes the long to pay off. Local banks will set you up with a contract, and a monthly payment. The other benefit is that you can get this loan postponed if you are having trouble paying it off.

Place your home up as collateral. Banks will generally allow you to borrow up to 75-80% of your home's worth, as long as you have at least 10-15% already down on your home. This is great because the loan will have a much lower interest rate than a credit card. Talk with your financier, or local mortgage company for more detailed information.

Use your credit card. This is a very dangerous game to be played. You need to stay on top of your monthly payments. If you fall behind, you get trapped in a death spiral. However, when carefully managed, credit cards can be great to get out of an emergency. Only use a credit card occasionally, when you are experiencing a hole you know that you can get out of.

Tap into your 401(k) plan. You will need a financial expert who can start up a C Corporation which you can then roll your retirement assets into. This is also a risky business, because you are tapping into your nest egg. This should only be done if you have more money put away in a savings account, or if you are independently wealthy.

Try loaning money from your friends and family. Ask who would be willing to make a contribution, or purchase a percentage of the company. Go about asking members of your church for donations. Let local businesses to partner with you. You might make some acquaintances, and make some deals (you make cheese, they make wine, a chance to exchange).

Pledge your future earnings. Some companies, or peoples, are willing to gamble and put money upfront, if you are willing to commit a certain percentage of future profits. This is a gamble because they, and you, are betting that you will be able to earn enough in the future. There is usually a contract involved, guaranteeing that they will at least get some money back, so keep that in mind.

Kickstart your business. Crowd funding, in the age of the internet, has become a very popular way to finance businesses. Write a description of your business idea online, at sites like Kickstarter, and convince people to donate to your business. You will want to be really descriptive, and excited in your word choice. The downside of this is that it could take months or years before you raise enough money.

Secure an SBA loan. SBA (Small Business Administration) is a branch of the Federal Government that supplies loans to businesses struggling to get off the ground. However, there are a number of qualifications. You had to have been denied a loan from another bank before. You have to meet the government's definition of a small business. You will also have to meet other restrictions, depending on the type of SBA loan. Go to the SBA's website, and fill out a form if you think you might meet these qualifications.

Attract an angel investor. These are wealthy individuals who like to bet on the financial success of start-up businesses. Angel investors are usually found at private-equity, and venture capital firms. You will want to bring someone older, who looks like he has had experience in business before. Be passionate about your idea when you present, and know all of the financial details before you walk in the room. Keep in contact with the investor days and weeks after your initial meeting.

Tips.

Talk to numerous lending institutions before you pick a loan. Some will have better interest rates, while others will have better repayments.

Consult with family members first. Getting a small loan from them can avoid dealing with greedy credit lenders.

Get some experience in the business before you start your own. If you want to start a restaurant, make sure you have worked in a restaurant before. If not, you will wind up purchasing outside help which will cost you astronomical amounts of money.

Warnings.

Talk to a lawyer and a financial advisor to avoid colossal mistakes. The biggest regret of many first-time small business owners is not consulting with a professional before they begin the process.

If you are a person living paycheck-to-paycheck, it is best to wait to start a small business. If the business goes down hill quickly, you could lose your assets, and your life savings.

Take a year to save up money and make a detailed plan. You do not want to go into small business owning head first.

November 13, 2019