All companies – for-profit, non-profit, large and small, new and seasoned, need to understand the grave importance of documentation. There are countless scenarios when a business is expected to furnish certain documents about its operations, plans, employees, and other activities. This is especially true for businesses that hope to secure any kind of funding. Contrary to what less informed business owners may believe, private investors, municipalities, and the federal government are not arbitrarily handing out free money when they publish a contract or grant opportunity. These funds come with restrictions and expectations. Funders want to ensure that their money is being used in a way that is relevant to their program. They need to take a deep look at the companies they intend to fund, including examining that company’s documentation.
What documents are important?
To an extent, all of them, but especially financials, employment history, and resumes, business plans, vision or mission statements, and meeting minutes. Most funders will expect to see all of these documents before considering a business for funding. Funders want to know who works at the company, how and why they are qualified, how much money the company has made in the past and intends to make in the future, and how they plan to make it. As ethics becomes increasingly important in society, many funders also want to see a mission statement to see how the company operates from an ethical perspective (e.g., is the company doing its part to end discrimination and avoid harming the environment?). Keeping these documents well polished and close at hand will make a business’s search for funding that much easier.
When To Begin Documenting
When should you start recording and documenting business activities? From the very first day, your business opens its doors, if not before. A business plan and mission statement should ideally be in place before the inception of the business. Financials should illustrate what the costs were of starting the business (the purchase or rental of physical space, equipment, hiring of employees, mandatory licenses, or certificates that needed to be obtained). All revenue that enters or exits the company thereafter must also be documented. When the company has regular meetings, especially board meetings or the equivalent, minutes should be kept on these meetings to share with potential funders who are interested in the ongoing plan of the business.
Documentation is necessary for obtaining funding, but it is also helpful to the small business concern in a direct way. Being able to look back at these documents can help make future activity planning stronger. It gives an honest evaluation of what business aspects have been successful and which need work. Do yourself a favor and keep your documentation up to date and organized. It will benefit your business in more ways than one.
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