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Five Golden Rules for Successfully Securing Small Business Funding
by Startacus Admin
Armed with an excellent idea and the drive to bring it to life, there’s one key element missing in getting started with a small business – funding. After all, it’s not exactly easy to just pull money out of fresh air – especially when the sum required is rather on the high side.
The good news however is that sourcing funds for small business ventures and startups doesn’t need to be as difficult as most tend to expect. It’s simply a case of knowing the options available to you and how to go about the process – check out the following video for more:
Rule 1 – Make Sure All Options Are Explored
The biggest problem with so many startups is the way in which their owners are not fully aware of how many funding sources may be available to them. They may explore one or two options, but fail to take into account dozens of other potential funding options. It is imperative that new businesses consider grants, loans, overdrafts, credit cards, equity release, sponsorship, partnerships, crowdfunding, venture capital and really a great many more available options.
Exploring every avenue means not only improving the likelihood of securing funding, but also securing the best possible terms at the same time. Just because one, or indeed any number of sources have been tried and come to nothing, it doesn’t mean than the next available source will be unwilling to help. Check out the Innovate UK innovation funding application process video herefor example.
Rule 2 – Know How Much Money You Need
Another crucially important rule is that of ensuring you know exactly how much money you intend to ask for ahead of time. This may come across as something relatively simple, though in the real world usually turns out to be quite to the contrary. For some businesses, the obvious approach appears to be that of asking for as much money as possible to be invested in their business. Nevertheless, experts always recommend tailoring requests for capital to the immediate and long-term goals of the business – asking for a figure out of thin air really isn’t an advisable solution.
What you need to do is to carry out a comprehensive evaluation of what exactly your company has to offer and where it is in its development. For example, if all you have is a great idea, you cannot expect to be given as much money as you would if you had a prototype product to show the prospective investor. Asking for too much at a stage in the process that’s far too early more often than not results in problems in the future.
Rule 3 – Be Credible
Regardless of what kind of stage your business is at, you have to remember that those who decide what does and doesn’t get financed respond primarily, if not exclusively, to numbers. This means that before even thinking about exploring any given avenue, you need to ensure your figures are in perfect working order and are totally credible. If you present something that is unrealistic, it’s game over. If you present something that is garbled and difficult to understand, you’ll struggle. If by contrast the figures speak volumes about both your business and your own professionalism, you stand a much greater chance of success.
Rule 4 – Go Crazy With Your Business Plan
As mentioned above, figures and statistics never fail to resonate well with those working in financial positions. Nevertheless, your financial projections will represent just one element of your comprehensive business plan, which should read like the kind of proposition that’s far too good to pass up.
Your business plan needs to include everything - your initial vision, your unique selling point, market research, the state of the competition, long-term targets and of course, comprehensive financial projections. But what is also important when coming up with an outstanding business plan is that you know every single word of it, inside and out. You’ll need to work with your business plan to create an incredibly sleek and concise pitch, which brings together the key points of the plan and highlights exactly why it is that they should invest in your business. Your business plan should essentially be the document that shows how you will breathe life into your initial vision.
Rule 5 – Plan Ahead Of Time
Last but not least, it is of crucial importance to remember that it almost always takes considerably longer than suspected to get hold of the required funding. Even if you have a fantastic idea and pique the interest of investors pretty early on, there’s a heck of a lot of administration and general complications involved in the process.
You can certainly speed up the process by ensuring that both your figures and your business plan are absolutely flawless and compelling from top to bottom. Nevertheless, it is relatively rare for new businesses to secure funding without the process taking several months at least – it’s always better to err on the side of caution.
And of course, patience is a virtue that will always pay off!
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