Monthly Archives: January 2016

What are investors looking for, if a small business in need of funding

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Small businesses looking for financial help from an “angel” often turn to individuals willing to invest in promising, start-up opportunities. Angel investors can be a good funding source to consider after you’ve tapped your friends and relatives. But angels usually don’t write blank checks. They’ll want to see progress and a way to exit the deal down the line with meaningful profits. So expect angel investors to do a lot of research and careful investigation into your business plan.

Be thoughtful in approaching potential investors. Biotech investors, for example, don’t want to hear about a clothing manufacturer. A scattershot approach is likely to turn them off. Industry associations, local trade groups or, in some states, business-incubator centers can help point to potential angels.

Angel investors often invest through groups or networks. These provide due diligence, extra research, access to potential deals and shared expertise that one person operating alone generally doesn’t have. For instance, one member of an angel group might have background in a particular industry or the know-how to set up deal terms, sharing that knowledge with the other investors.

Angel investors are usually thorough, so don’t expect to get your money quickly. It could take several months to meet with different individuals or groups and answer all of their questions. (There are exceptions, including the case of Google, which got funding from an angel before its cofounders finished their presentation to him.)

Because they’ll own a part of your company, they’ll likely want a say in major decisions, and they’ll watch to see whether you listen to them. Don’t expect them to write a check and walk away. Many angel investors are former business owners who want to help people like themselves. They may be able to provide good advice based on their previous experiences.

Getting funding from angel investors isn’t easy, but it can be done if you take the right approach and are a good match with their interests. And the benefits can beyond the money for your business, but their expertise in both in business operations and your industry niche.

 

source : http://guides.wsj.com

The importance of knowledge to developing a budget

A budget is a document that allocates financial, physical and human resource use over a specified period of time to attain certain goals.

A good budget upholds organizations’ long-term goals and should allocate resources to activities that will drive the company towards achievement of such goals.

Developing a business budget is an exercise that all accountants undertake on an annual basis and which forms an integral part of any successful business planning.

The following are the best practices adopted by world class businesses while developing a budget:

1. Link budget development to corporate strategy

To best serve the company’s long term goals and objectives the managers develop a budget that is in line with the company’s corporate strategy.

This unites together personnel in focusing what matters most to the organization and avoids uncoordinated and scattered efforts by various departments and managers.

Read more on corporate governance: http://www.business-competence.com/corporate-governance.html

2. Leverage on technology while designing the budget

More companies are automating their budget management to ease the process and also involve every stakeholder as much as possible. When developing a budget it is best that every stakeholder is kept in the loop on progress during the budget implementation period on performance.

Technology eases business budgeting process and makes it possible for line managers inputs to be incorporated in the budget. Effective technology can be used to make, updating and track of budget much easier.

3. Tie employee incentives to performance measures

To ensure that the business budgeting is a success leading companies tie organization reward system to how best they meet the budget. While managers are expected to uphold the organizational goals in some instances they can engage in counter productive activities creating risks. Tying budget to the reward system can bring a balanced conduct within the management.

4. Keep an eye of cost management in the budgeting

Managers should keep abreast current costs and probable futures costs to ensure that they provide the budget developers with accurate and relevant information.

This is very useful as it reduces time and cost of developing a budget, since information is readily available.

5. Manage effectively the budget process

To develop a quality budget at low cost the managers should streamline the process by ensuring necessary information is available for access during budgeting and avoid possible delaying circumstances. This will ensure the budget cycle is cost effective and budget developed is effective.

6. Ensure that the budget is flexible to accommodate change

A good budget should be flexible such that it can incorporate changes in the future. Ideally the future cannot be fully be determined and therefore a good budget should be one that can accommodate changes brought by uncertainties in the future.