YOUR BUSINESS NEEDS MONEY
"It's money that makes the world go around." Every existing I business firm and start-up firm needs money. Money must JLbe borrowed to support payroll, material, equipment, and other costs before any revenue materializes.
If you picked up this book you may be an entrepreneur who is burning with a hot idea. You will importune family, friends, neighbors, venture capital firms, and banks for help. You will promise a several-fold return. You will argue that this is not charity, but a chance for the investor to make money while helping you build a great new business.
Or you may be an existing small business owner who runs into a cash flow problem. You will rush to your bank pleading for an extension of credit. You will need to make the best case to convince the bank that you will be able to pay back its funds with interest! You might have to seek out another bank, or friends, family, or neighbors for financial aid to carry your business through the crisis.
Or you may be part of a rapidly growing large firm that
needs substantial amounts of cash to build new factories and open new markets. If you are the company's financial vice president it is your job to envision the best mix of investor sources—commercial banks, investment banks, stock issues, debentures, and so on—to pursue. You have to demonstrate that the company's growth is real and will amply reward the investors.
Finally, you may belong to a large company that is in deep trouble. Your company badly needs money but is seen as a poor risk. Investors will be available but at a high cost of capital. How do troubled firms attract capital at a not too ruinous cost?
THE SOLUTION: MARKETING
We believe that marketing concepts can help all these types of firms do a better job of attracting the funds they need. Our answer is not to knock on every possible investor's door in the hope of finally finding a benefactor. Marketing theory and practice involve a highly disciplined approach to identifying the best sources of capital and convincing them of a high reward-to-risk ratio in lending their funds. This book will explain the different sources of funds and how investors and lenders decide whom to back from among competing borrowers. Once you understand how different types of investors and lenders think, you can identify your business's best prospects and make your best case for financial assistance. Every busi-nessperson is ultimately competing for capital and must market with hard facts and convincing arguments.
The first part of this book is an introduction and overview of the capital markets. The second part describes how capital markets operate. The third part describes how marketing concepts and tools can aid in the process of attracting the capital that you need for your business.
Good sailing in the money waters!
Philip Kotler Hermawan Kartajaya S. David Young