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Prep

Funding 101: Prep

 

They say it takes money to make money. Well, it often takes money to raise money.

To be fair, it's entirely possible to raise capital for your business without ever spending a nickel, but if you had to place your bets, you're probably going to spend at least a little bit of cash on your fundraising campaign.

Let's first assume that if you were industrious enough, you can probably figure out how to do anything on this list for free. What we'll talk about here is what most people wind up spending if and when they do decide to use paid services.

Incorporation

($50 - $500)

Setting up an incorporated company is about the easiest thing you can do. While the concept of picking a C-Corp versus a LLC may sound a little bit confusing right now, the amount of time and cost is worth the investment.

Just about any type of capital from a business credit card to a venture capital investment is going to require you to be incorporated, so this is a must.

There are dozens of sites that will allow you to incorporate online in less than an hour and all electronically. Just about any type of capital from a business credit card to a venture capital investment is going to require you to be incorporated, so this is a must. They will also setup your tax-id for an additional fee or you can set it up directly on the IRS website yourself.

Business Plan Writing

($500 - $10,000)

The Business Plan is easily the most misunderstood part of the whole fundraising process.

Business Plans are not applications for capital. They are the output of having spent a lot of time critically thinking about every aspect of your business idea. When you hear investors ask for your business plan, they certainly want to review the plan, but they are also implicitly asking "Have you done your homework?"

The price of business plans range based on how prepared you are. If you've spent a great deal of time researching your business and simply need someone to ghost write your whole concept into a document, you can do that for as little as $500, maybe less.

The price starts to escalate quickly when you have done very little preparation and you need someone to really build the plan from scratch. At that point you're really hiring a consultant to become part of your team, which like any other service can get expensive.

Website

($150 - $5,000)

Whether or not you have an idea that is relevant to the Internet, these days everyone goes to the Web to do their homework, and investors are no exception.

Therefore having a Web presence for your company is very important, even if it's just a single page with an overview of who you are.

Since this will likely be the first impression most people get of your business, it's worth making a good one. A good Web site can be built for you for a few hundred dollars using a stock professional template with your information inserted. There's no good reason to show up with a terrible looking Web site anymore.

If your needs become more significant, your costs will jump quickly as you add the ability to do e-commerce and other features. If all you need to do is put up a professional face, a small Web site for a few hundred dollars will certainly suffice.

Brand and Collateral Design

($100 - $2,000)

Investing in a little bit of brand identity is always worthwhile. Items like a logo, a nice color palette, and some associated collateral items like cards and a Web site go a long way toward conveying the right image for your company.

At the very least you can go online and purchase a stock logo with some business cards for less than $100. If you want to take it up a notch, you can have a custom logo designed which may also give your company its own color palette and design touches that you can use on your business plan, Web site, pitch deck and other collateral materials.

The costs begin to escalate when you engage a designer to spend lots of cycles doing custom designs in search of the perfect look. If you're satisfied with something simple, you can avoid much of the associated expense.

Funding Research

($50 - $1,000)

Finding the right list of funding prospects to pitch isn't about availability (there are lots of directories of investors) it's about relevancy.

When evaluating a funding database, focus on whether or not you are getting access to the actual investors.

Your best bet is always going to be references you can get from business colleagues. However, if you're like most people, that list is pretty short. Therefore you will likely seek out a way to identify more investors to pitch.

When evaluating a funding database, focus on whether or not you are getting access to the actual investors. Most funding databases will list general contact information for companies that provide investment. A better funding database will provide more detail about the actual investors, and in the best sense, a direct contact to them.

Summary

Starting a company is synonymous with cutting costs and skimping, and certainly your approach to a fundraising budget will be no different. However, don't lose sight of the fact that even small investments in these assets can go a long way toward making your fundraising campaign far more successful.