Planning Finance

Securing funding for your new product, service or idea is often one of the greatest obstacles to success. Sources of finance may include overdrafts or loans, equity finance from business angels or venture capitalists, government or philanthropic grants or joint ventures.

It is possible that your funding needs will change during the different stages of your product's development so it is important to include research into all available funding options as part of your planning process. Being aware of the funding options available allows you to match the right type of funding to the different stages of your product development. For example, you may qualify for a government grant to supply seed funding for research and development, but a bank or family loan may provide the required funding during your commercialisation stage.

Funding required at the different stages of your product and service development typically includes:

• early seed capital - this is money for starting up the business (if required), conducting market research and testing, initial product design and undertaking the early commercialisation, or 'proof-of-concept', of your product
• bootstrapping - typically how most small startups run their operations, this involves running the business without any capital injection from bank loans, overdrafts or other traditional sources. Entrepreneurs who bootstrap need to be very adept at running their business on the 'smell of an oily rag' - being creative with both what they spend money on and how they bring it into the operation
• prototype design and development - depending on your product or service, this stage often requires significant funding that typically comes from sources including Commonwealth or State Government grants, overdrafts, loans or venture capital

As funding does not generally offer a limitless stream of finance, it is also important to use your planning stage to accurately estimate what finance you need, when you will need it and what cost control mechanisms you should employ to ensure that the funds will last until you reach break-even point. A rigorous market research and business planning process will help to accurately estimate these costs from the outset.