gmbf start-up strategy budgeting and raising finance july 2012

GMBF

Start-up strategyBudgeting and raising finance

July 2012

© Copyright SALVUS. 2011

“Why” rather than “how”

Forces you to think about all aspects

Brings organizational discipline critical in early stages

Essential for equity financing

Foundation for subsequent bank financing

Budgeting & Business Planning


Like planning a journey: where do you want to go? How best can you reach there?

What does our business stand for?

What are the serious challenges facing us and how do we respond to these?

How will we stay different from competition?

Do we have what it takes to get to our destination – what exactly do we need and when?

How will the plan be financed?

but………

Business planning: a thought process


Business Planning: some pointers

Must address the short term (operating plan) and the medium term (growth plan)

Long term, strategic plan may not be not too meaningful for start-ups, but required for equity raising

Plans are meant to be flexible and proactive

Alignment with personal objectives

Are numbers are derived from plans or vice versa?


Bootstrapping for start-ups

A different perspective on budgetingKeep it lean and mean -- low-cost passionate staff, innovative compensation -- “use” technologyMinimize capital -- only to cover expenses -- retain control -- brings efficiency and economy cultureGet the cash flowing -- get the product out, even at break-even -- reduce liquidity pressures


Financing start-ups: Debt

Bank finance is almost impossible, universally More so in this region Private financing available, but short term and very

expensive Market for convertible/hybrid financing virtually non-

existent Friends and family often relied upon

Prepare for bank debt from Day 1


Financing start-ups: Equity

Equity is the more common financing method. Typical equity financing stages are:

Personal savings

Friends and family Angel investors Venture capital Private equity funds

gmbf start-up strategy budgeting and raising finance july 2012

Documents