If you plan to obtain funding, you should start with a solid business plan. If your business plan is convincing, then your chances of obtaining funding are greatly enhanced. Lenders and investors want to see proof that customers want your product or service and are willing to buy it for a price at which you can make a profit. The more tangible evidence you offer of this claim, the better chance you have.
In today’s marketplace, there are several options available for securing business funding from outside parties. Here we will discuss some tips to improve your chances of getting small business funding, no matter how much you need to start or grow your business.
Nurture Your Network
This is the first step because this is the foundation for the other tips. Having a good professional network is key to being introduced and getting in front of the right people to not only get funding for your business but to grow it too. You can do this by staying in touch with your past colleagues and supervisors and attended local networking events and conferences. This can help you meet new people in your network that could introduce you to an investor or loan manager.
Remember it is important when you are networking to focus on knowing the person not just about what they can offer you or how they can help grow your business. Do not take advantage of people, make sure you focus on listening to them and being a resource to everyone you meet.
Take Out a Bank Loan
Taking out a small business loan from a bank or lender can be a good way to get a reasonable amount of money fast, but it requires putting your personal credit or assets on the line.
Most lenders will not give large loan amounts of money to someone who does not have the money to pay it back or a set business plan to ensure that the money will be returned. Investment rates and amounts loaned depends highly on each institution, as well as the location and industry you are in. Some banks consider certain industries riskier than others, so terms may be different depending on what type of business you have.
If you have already started your business and looking for funding to grow it, you can pull profits and reinvest it back into your business, this is called bootstrapping. Reevaluate your salary and expenses and see if you can take profits from the business and use it towards something you know will improve it in the long run.
Get a Loan from Friends or Family
If you do not have the money to fund a business and you are not able to get a loan from a bank, consider asking friends or family. Although there is some risk involved with this, it is worth asking. It should be your last resort and they should be proactive about loaning the money to be an investor in your business.
Find Venture Investors
Many entrepreneurs look for investors in their business and promise them a percentage of ownership in the company in exchange for monetary contribution. The terms of an investment relationship very widely, but this can be a good way to get the money you need that is not a loan.
It might be a good option if you are starting the company and do not have profits or income to be put back into the business. It takes a lot of time and effort to find the right investor so start by looking in or your local area or capital investors that invest in your industry.
Create a Clear Pitch
It is important that you have a clear and concise pitch deck for your initial meeting. They should only be 20 minutes or less and explain what the business idea is, why the money is needed, and specifics of the business such as the timeline of growth.
Redo Your Branding
If you are getting rejected for funding, you should look at your business branding. Having a professional branding that is the right impression for your business and ensures that people see your company as a credible resource that is worthy of giving money to.