When you start a company with very little cash on hand then you have only one choice initially and that is to find customers for your future service/product. You need to prove the concept as they say.
The best way to prove a concept is by having new customers sign up on a purchase or lease agreement. An agreement for at least one year.
The agreement creates a proven revenue for a certain time.
At this stage you have two choices of capital: investors or, preferably, a lender (you keep control of the project).
If you choose a lender you use the agreements to your advantage. The agreements includes creditworthiness (a start-up company is automaticly not trustworthy because it has no revenue or earnings history) and you also have your customers promise of future payments (monhtly payments is a must if you are to get a loan).
As I have described in at least 2 other threads on this forum, the bank will value your business based on annual earnings divided by a cap rate (the cap rate they choose and which you either accept, reject or negotiate). The value they arrive at they will usually lend a certain percentage on (in Sweden this percentage is 75%).
I want you to test it yourself before saying it won't work. Saying things won't work if you have not yet tested it is pure arrogance.
The best way to prove a concept is by having new customers sign up on a purchase or lease agreement. An agreement for at least one year.
The agreement creates a proven revenue for a certain time.
At this stage you have two choices of capital: investors or, preferably, a lender (you keep control of the project).
If you choose a lender you use the agreements to your advantage. The agreements includes creditworthiness (a start-up company is automaticly not trustworthy because it has no revenue or earnings history) and you also have your customers promise of future payments (monhtly payments is a must if you are to get a loan).
As I have described in at least 2 other threads on this forum, the bank will value your business based on annual earnings divided by a cap rate (the cap rate they choose and which you either accept, reject or negotiate). The value they arrive at they will usually lend a certain percentage on (in Sweden this percentage is 75%).
I want you to test it yourself before saying it won't work. Saying things won't work if you have not yet tested it is pure arrogance.
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