How Much Money Do You Need – and When Do You Need It?

How Much Money Do You Need –
and When Do You Need It?
If you have decided that you will need additional financing, you will then need to carefully assess
your needs and determine not only the amount you need, but when you will need it. Many business
owners overestimate or underestimate their capital requirements and/or do not time their financing
to the best advantage. Either can lead to serious problems.
The first thing you need is a realistic business plan and one that you intend to follow as closely as
possible. (Does this sound repetitious?) The only way to look at every aspect of your business is
through the planning process. It will force you create an organizational plan and a marketing plan
and quantify your concepts through the development of projected financial statements whose
numbers can then be analyzed and used in the decision making process. Those projections give you
an educated estimate of your financial needs and tell you when they will most likely occur. Your
business plan will answer such questions as:
• What are my most critical needs?
• If I need the money for immediate operating capital, how much will I need to
operate my business until it becomes self-sustaining?
• If I need the money to buy fixed assets for my business, has my research
shown that I can reach the target market that will justify the purchase of those
assets? If not now, when would be the optimum time to add those assets?
• If I need the money for marketing, what are the most effective ways to reach
my target market? How much will it cost to advertise? Will the increased
marketing be reflected in even higher increases in revenues? According to
my industry trends, what are the best selling periods and when will I need
financing in order to have the lead time to advertise for the best results?