Are you looking for cash to fund a new business, purchase an existing business or franchise?
Finding extra cash features very highly on every entrepreneur’s wish list. Although a lot of people find investors to support their business ventures, there are also lots of people struggling to get their businesses off the ground due to lack of funding.
In this article I will be sharing with you the main reasons why some entrepreneurs struggle to find funding and how you can go about your funding process to increase your chances of success.
The Dos when Looking for Finance
- Get your business plan in shape
Your ability to produce a clear, succinct, well thought out and well-researched business plan places you a few steps ahead of the competition.
A lot of businesses don’t get funded because their plans are poorly written, over optimistic in their financial projections and poorly presented.
Don’t let this initial hurdle stop you. If you don’t have a business plan at this point, then go write one or get someone to help you put it together. If you already have a business plan, then refine it and have it reviewed by a professional.
What investors look out for:
- Is the product or service commercially viable?
- Does the company have potential for sustained growth?
- Do you and your team have the ability to deliver this plan and grow the business?
- Is it too risky to invest in?
- Does the potential financial return on the investment meet their investment criteria?
- Stand out from the crowd with a mind blowing pitch
The banks and investors receive scores of business proposals. Why should they spend their precious 5-10mins looking at yours? Make yours jump out from the rest any way you can.
If you are lucky enough to be given a platform to pitch your business, then this is your chance to grab their attention. Tell them who you are, what your business is, what’s unique about it, the amount you are looking for, what you will use it for and what they get in return. Cut out all the fluff and gimmicks and get to the point. Basically aim to blow their minds in under 3 minutes.
- Stick to what you know
Investors are looking for competent and experienced partners to work with. You have a better chance of finding finance if your business venture is in an area you have knowledge and experience about. As much as possible try to stick to what you know and avoid industries that you have no knowledge about. A team with the relevant experience is a MUST if you have no personal experience in the industry.
The Don’ts when Looking for Finanance
- Don’t forget the financial bit
The financial statements i.e. balance sheet, income statement and cash-flow statement shouldn’t be your weakest link. The quality of your projection will demonstrate to investors that you pay attention to detail and have properly thought out the financial implications of your plans. An accountant can help you with this area if you struggle with numbers.
- Six degrees of separation – don’t underestimate your existing contacts
Every article on funding starts with asking your friends and family, but few people take the trouble to exploit this avenue properly.
Our friends and families are our greatest supporters and are quite willing to support us provided we present them with a viable business proposition.
Don’t cut corners when pitching to friends or family. Be professional and show them how you can make them money. At the end of the day that is what most people are interested in. I had a friend who did a full on presentation of his business idea to my family.
Although we didn’t invest in his business, we were so impressed with him that we opened up our contacts to him. If there is only six degrees of separation between everybody on earth, you never know where this seemingly small step may take you.
- Don’t Limit your search
It may be that a cocktail of funding options is your only chance of securing adequate funding for your business. Do your research to identify the options available to you. Few businesses have only one source of funding.
There are age and gender specific grants and other funding options available to specific demographics of the population. Research the grants, banks and angel networks available, tailoring your approach to each source. Your geographic location doesn’t matter so much anymore, as investors are quite happy to invest anywhere provided it fits their investment criteria.
The quest for funding takes time. You’ll be better off starting now! Reach out to people, ask for help and let them share their experiences with you.
For those looking to buy existing businesses or franchises – why not ask for introductions to the seller or franchisor’s bankers? Their bankers already know their business, all you have to do is prove that you are capable of replicating their success.
Good luck and wishing you every success in your search.
Griselda Kumordzie Togobo is a business consultant, speaker and coach dedicated to helping business owners increase their profits and productivity. She is a chartered accountant and holds an MPhil in Industrial Systems, Manufacture and Management from Wolfson College, Cambridge University.
I’m also an Enterprise Ambassador at Leeds University and guest lecture on entrepreneurship.
I founded AWOVI Consulting after a career with an international professional services firm where I provided business advisory services to small and medium sized Enterprises, Charities, The NHS and blue-chip companies.
I also own and run Forward Ladies where I am on a mission to make a difference in the lives of entrepreneurs as well as career women. Check it out.