How to prepare your business for funding
It is not always guaranteed that you will succeed in raising funds for your business; according to Entrepreneur.com, less than 5% percent of businesses succeed in raising funds outside their family and friends. One reason for this is that many businesses do not make the preparations necessary to meet their funding goals. So, what steps can you take to prepare your business before sourcing for funds?
- The first step is to Determine the Amount you need to Raise – this requires that you evaluate your specific financial need. So that you have a clear picture of the specific amount you need to raise and the specific way you’re going to spend it to improve your business. Say you need to expand your production you would need to estimate the amount you would need to get the pieces of equipment and labour to meet your expansion goals.
- Next, Outline all the Sources of Funding – once you have clearly defined the exact amount of money you need and how you intend to spend it, you need to research the various funding options available to you. In carrying out such research it is important to be open to exploring non-traditional funding opportunities too.
- The third step is to Learn what is Required to Secure Funding from your top Options – after carrying out your research on the various funding opportunities available to you, you need to select the top options your company is viable for and learn the terms required to secure funding from each of them. At the end of this research, you should know what metrics are important to your investors if you’re seeking investment or their lending rate if it is a loan.
- Next, Make the Necessary Preparations – as you may have learned from your research in the previous step each funding opportunity has unique requirements. For instance, to secure a bank loan you need to have an asset that you can offer as collateral, you would also need to present your business plan and other documents. We recommend that the documents you present follow the guidelines for whatever funding option you choose to go with. This will reduce the time spent on the process as well as increase your chances of getting financed.
- Get Funding Savvy or Get Help – applying for funds whether via lenders or investors requires that you’re articulate in communicating the need for such funds, & your business performance. To do these successfully, you need to be able to develop the skills required to write a successful business plan, grant application, or financial projections, etc. But when you can, bringing in expert help to better present your business as a viable option for funding increases your chances of meeting your funding goals.
Whatever funding opportunity you choose to pursue, your commitment to making the necessary preparations would help make the time & effort spent worthwhile. What do you do to prepare for a funding drive?