Here are five questions you should consider before you begin the funding process:

1. How much is my business worth, today?

This is crucial for banks and investors. Is your company/business worth enough to cover the investment? Hiring new workers is a key motivation in today’s high market of unemployment. Even with an investment or a loan, hiring new workers means having a sustainable business model that is going to last more than another year or two. Those new workers want some long-term security, as do your investors.

2. What is the money really for?

If you tell your banker that you need to hire new workers, you better be prepared to support that statement. How many new workers? What will they do? What are the working conditions? Do you have people in mind, already? Being able to describe the roles you need to fill and how much they need to be paid, along the ability to say, “I have four people I’ve been working with on a contract basis who are ready to be full-time employees,” goes a long way to building credibility.

3. Can’t you fund your expansion yourself?

For many of us, that’s a no-brainer. If you can help it, don’t take on an interest-bearing loan or become indebted to investors. The problem is that while many businesses today are doing well enough to limp along, they’re not well enough to hire new people or mortgage a bigger building. Without additional workers or extra space, these companies will not be able to grow.

4. What is your projected revenue for the next five years?

Some folks predict five years out, while some are only looking three years. Regardless of how long you’re willing to predict forward, you still need to show a revenue line that covers the growth and the investment. No one is going to give you funds if you’re merely trying to stay alive. You must show the opportunity for growth.

5. Do I have a strong executive team to manage growth?

Existing companies looking for growth funds need to show the ability to manage a solid executive team and the growth that follows. You can’t expect a bank or other investor to approve new cashflow if Cheryl from marketing hasn’t produced anything for the company except lunch expenses, or if Patrick has hired two mediocre sales people for his team and failed to meet quarterly goals, or if the head of Business Development needs some new development. If you’re doing all the work yourself despite having an executive team, you’re essentially asking someone to invest in you. And, seriously, how much are you really worth?

There are more questions to ask than just these five. In an economy that is struggling to bring back the good old days, establishments in the business of investing funds to small business owners are only doing so when the small business owner can justify those funds and show a profitable return.

If you think it’s personal, you’re right. It is personal — personal enough to ask you a lot of questions about prior year’s income, to the point of asking why you purchased a new car last year. Really, did you need a new car? It can get personal enough to ask why you haven’t used the $25,000 you have in savings, which they know you have because you gave them permission to review your finances. It’s even personal enough to include questions about why you haven’t tapped into family and friends first.

The act of supporting businesses with added funds, whether from family and friends, a bank or a VC, involves pretending you can guarantee a return on the investment. Everyone knows there is no guarantee.

“How much of your own money are you going to put in?” a banker asked a friend of mine looking for funding to expand her two year old business.

“If I had my own money,” she said, “I wouldn’t be here asking you for yours.”

She didn’t get the loan. Will you?

Editor’s Note: This article was previously published at OPENForum.com under the title: “5 Questions to Ask Before Going for Funding.” It is republished here with permission.

From Small Business Trends

Ask Yourself These Questions Before Going for Funding

These books and their authors are your competition. Yes, some of those almost two million books have one and the same author but that doesn’t change your odds all that much. You have a task ahead of you … so, let’s look at the small picture and talk about ways you can compete. Regardless of how your book came to be published, it is up to you, the author, to create the attention that will turn into sales.

The good news is that it has never been easier to get your book noticed by the right people. In fact, before you put fingers to keyboard, before you type “Chapter One” on that pristine blank page — you should begin your marketing. You should be promoting yourself and your book, via the web, even before the book is done.

Shel Israel, co-author with Robert Scoble, of Naked Conversations, is creating his newest book online with the help of Twitter friends and blog comments. He and Scoble did a similar thing with Naked Conversations, and it reached bestseller status. The key is to talk about the book, share your writing stories, ask for input, and get your readers involved. The more involved I am in the writing of your book, the more likely I am not only to buy it when it’s done, but to help promote it to others.

Let’s talk about The Top 10 Ways to Promote Your Book in 2009: 

(1) Create a Blog Book Tour

Your book blog, named after your book — or after you, depending on what you’re branding — should be an invitation to connect with readers, other authors, and business professionals. As you visit their blogs and leave comments (linking back to your blog), also take time to build the relationship and identify possible review opportunities.

Choose blogs whose writers are consistent in their posting, who generate comments, and who are able to speak to your expertise when they write about you and your book. If you want help, tap into this Blog Book Tour site.  

(2) Create a Book Video Trailer

This is much like a movie trailer. Dr. Susan Reid, one of my authors, created an outstanding book trailer to introduce people to her book. It’s short, it outlines what the book is about and it creates the right “expression” — supporting the books’ goal to help small business owners tap into their “Inner Samaurai.”

Use a webcam or a Flip video camera, add some background music, and read from your introduction. Although Dr. Reid did not narrate her video, I recommend you narrate yours. Readers want to connect with you and hearing your voice brings you closer to being a “real person” to them. 

(3) Be Creative with Your Press Releases

Today’s press releases are more than announcements. They are Search Engine magnets. Choose a good firm that understands the value of attracting search engines, and write a killer headline. A killer headline grabs the reader’s attention.

When I wrote my book Dickless Marketing (about marketing to women online, leaving behind the old Dick and Jane world of the 20th century), I created this headline: “Look, Dick. See Jane. See Jane Dominate E-Commerce.” I got a call the same day to be on a local TV station. The headline got the reporter’s attention.  The body of the release, which revealed the title of the book, convinced her to have me on the show.

I covered two bases there – one was to be current and informative, the other was to be provocative.

(4) Find Local Sponsors to Buy Case Quantities of Your Book

With the economy forcing so many businesses to tighten their belts, this is a great time to be resourceful with your book. The price of a book (usually under $35) makes it a great giveaway for a bank or a business organization.

Banks are eager to attract more small business owners, and business organizations are always looking for qualified speakers – with books. Our local KeyBank supports women business owners and hosts a breakfast once a year, where they give away the speaker’s book after she speaks.  

(5) Connect With Your Local News – Both TV and Radio

This form of marketing is not dead, as some would have you believe. The news editor is always looking for great stories about local people.

Send a letter, with an overview of your book and your press release, and a testimonial from someone of authority. Make it easy for the editor, tell her why covering your book will make a good noon news story. Take the 6 a.m. slot if that’s offered – a lot of people are up watching or listening to the news at 6 a.m. 

(6) Speaking of Voices of Authority – Who do You Know That Can Offer a Testimonial?

Authors tend to leave this for last, thinking they need to have a preview copy of the book in hand before someone will grant them the privilege of a testimonial. This is patently untrue.

Tap into a former college professor, a CEO from a networking group, the author of a book you’ve enjoyed, or the founder of a popular website/social networking group. Let them know you’re writing the book and ask them if they would offer a testimonial. 

Tap into your LinkedIn profile. Three degrees of separation can work in your favor. You do have a LinkedIn profile, don’t you? To learn how to use LinkedIn more effectively, visit Steve Tylock’s site: The LinkedIn Personal Trainer.  

(7) Use Twitter

See what Guy Kawasaki, talking with Robert Scoble, says about Twitter in this video:   On Twitter, you can easily connect to thousands of people you might never meet otherwise. Be selective but friendly. Don’t over promote your book on Twitter – rather, be on the lookout for people who will promote you – by sharing the link to your blog or your book’s sales’ page. Make friends … friends help friends out.

(8) Be Remarkable

Marketer Seth Godin swears by this principle, and it’s true that standing out from the crowd has its benefits.

When I say be remarkable, I’m leaning more towards the Scott Ginsberg model. Scott is “that nametag guy” … he wears a nametag everywhere he goes (he even has one tattooed on his chest!). If you search online, using any search engine, for ‘that nametag guy’ you will get hundreds of thousands of hits and they are all about Scott.

What phrase will you claim in Google or Yahoo? My phrase is the name of my book, Dickless Marketing, although I often come up on the first page of a Google search for just my first name (today, I’m #9 out of 29,100,000).

(9) Become an Amazon Best Seller

Connect with experts who know how to do this. It involves a lot of work, a lot of connections, and a focus on results. Kathleen Gage has done it for others, more than once, and can do it for you, too. Invest in the tools to create the kind of attention and build the kind of mailing list that will continue to support you and your book for years to come. 

(10) Utilize as Many Facets of Social Media as You Can

Yes, create a Facebook page. Yes, join SWOM (Society for Word of Mouth).

Yes, follow Marti Lawrence’s lead and create a page on Squidoo.  Her book, 7 Way You Screw Up Your Life, (Are you FUGGDUP? Forgetting, Underestimating, Gratifying, Grieving, Deceiving, Undermining and Procrastinating are some of the most common problems that cause your life to be screwed up. Is this scenario familiar?) displays her book cover, a compelling description, and an easy link to her buy page. Squidoo is free and worth the few minutes to create a page and a link to all the places we can purchase your book. Remember to add your blog and Squidoo page to your email signature.

The book industry is changing dramatically, in response to the social networking aspect of business life today. Authors are ever more qualified to be the marketers of their book, by understanding where their market hangs out and showing up now and then; online and offline. Joe Girard, recognized as the best salesperson ever, says it best: “The elevator to success is out of order. You’ll have to use the stairs … one step at a time.”

Part of the Small Business Trends 2009 Trends Series.

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About the Author:  Yvonne DiVita, President of Windsor Media Enterprises, LLC: Books, Blogs and Beyond, is focused on consulting with businesses on how to effectively use new media tools. She blogs at LipSticking, with a focus on the women’s market.

From Small Business Trends

Top 10 Ways to Promote Your Business Book in 2009