Important of Financing

  1. Considering what I know about renewable energy, what are some of the key things I need to be able to explain to a potential funder of my project?
  2. What finance-based processes would I use to explain our potential for success?

Key items to discuss with financiers would be the break even point, at what time will the investment have paid off and is that time length acceptable?  What will the return on investment look like to the potential funder, is there a specific interest rate and is it compounded continuous, annual, does it begin after the break even point?  Will additional funding be needed in 1 year, 5 years, 10 years?  And will the investor see one lump sum payoff or will annuities be paid out over time?  Additionally, the investor will need to see a solid business plan that outlines how the owner/entrepreneur plans on making money, their marketing strategy, and all attempts to perform successfully.

First, the investor will need to know up front purchase price of any products, how many people will be needed to help run the company to determine payroll, what is the cost of overhead, will any facilities need to be rented or specific automobiles or machines, etc.  Second, the investor will need to see an outline of what the accounts payables and receivables expect to determine if the investment is wise.  Finally, a look at the general ledger or quarterly tax filings to confirm the investment is paying off.

Danielle DeBoer

One thought on “Important of Financing

  1. One of the important things you mentioned was that investors want to know if additional funding is required. This is very important for the person starting the business to properly elaborate and explain upfront. There has been many times in many different sectors in which a company started up, but needed additional funding without properly securing additional investors as well.

    My Blog: http://engr312.dutton.psu.edu/2014/10/21/cost-of-capital-facciolla/

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