Do we need an investment or not? Every entrepreneur in various stages of their business thinks of attracting additional resources for their business. But only a few are do it and achieve success.
Investments may be needed at different stages of the business of its existence, in the case of lack of funds in the organization, for the creation and implementation of projects, for operating expenses and etc. needs.
The investment allows to:
- Make the jump in business development at the expense of a substantial investment;
- Implement projects and programs for which the enterprise in the natural development (self-realization at their own expense) will take years.
Before you start work on attracting investments, you should evaluate the readiness of the business for their receipt and further development. The desire to receive financial resources and realize new opportunities should be supported not only by desire, but also by real business opportunities allowing to master financial investments.
The investment is not exceptionally advantageous form of obtaining funding for the development of the company, despite the fact that investment in the Customer may receive a low annual interest rate for a refund.
In some projects, in which the customer for investment cash, aims to himself the goal in the form of participation in the project as the future owner of the enterprise, real estate or other property by final of the project. Investor Participation in such a project, can significantly reduce the attractiveness of the project to customer himself, or even eliminate the need for its implementation.
For such projects, the Customer’s financial means, makes sense to think about the credit, even at the highest possible rate of interest. The main thing is that the loan will help to achieve the goals set by the customer, and will ensure his participation in the project.
Credit as a form of obtaining funds in modern business can have a lower interest rate than the investment, due to the overlap of risk of the creditor by the guarantees. While in Ukraine, today, this formula does not work, because banks still put up substantial business loan rate, assessing the risks of loss of money is highest, reducing the popularity of this form of financing.
The credit has a dark side. As to obtain it requires financial guarantees to finance on the part of the customer. Basically, beginning businessmen with project start-ups is unable to meet the requirements for the loan. In this connection, besides investment variants scarcely remains.
The transition to work with credit funds or investments entails fundamental changes for the business associated with the transition to the project form of management and organization. Such changes occur regardless of the customer’s desire for investment.
The second important change is to increase the responsibility of the Customer for financing the results of operations. Such liability increases in proportion to financial obligations that add an additional burden to the business.
Most of the entrepreneurs faced with these difficulties, as well as difficulties in the work with potential investors remain forever in the so-called “small business”, because they can not overcome (to solve) these problems.
Difficulties arise due to objective reasons. Referring to the structures which have the financial resources, the entrepreneur enters into relationships with experienced and qualified professionals who have earned the money, including at the placement of their funds in various projects.
Today, credit or investment, it is not exhaustive forms of obtaining funding. So, for example, options for obtaining funds, can be considered grants, donations, irrevocable financial assistance, etc., depending on the type of project that needs to be funded. A variety of possible forms of obtaining funding, offer a variety of financial institutions, government agencies and business support programs, banks, commercial and public organizations, etc..
Stop work / negotiations with the investor about the investment in the project is not the right solution.
Working with the investor allows the customer for finance:
- Improve the quality of your business management;
- Qualitatively overestimate your project, taking into account its advantages and disadvantages. To develop the project;
- Get experience and skills required to create new projects or ideas.
Only by working with the investor, the opportunity to really assess the prospects and the content of their project. Since an investor, be careful and do not discriminate its evaluate before allocate to it at least one penny. As a result of this assessment, you can also conclude whether it is necessary to continue to work with the project and whether it has a perspective.
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