If you’re a small business owner raising funds is a tough ask. Whether you are starting a business and need funds to begin your journey, or you’re at the next phase of your business and are seeking funds with which to scale up your existing structures, it will be difficult. If you face up to this early on and realise how much hard work must go into chasing funds, you’ll be one step closer to realising your goals.
Although there is a lot of hard work and time put into a successful acquisition of funds to help your business grow, bear in mind a few simple steps that if you follow comprehensively, will help you complete the task.
A Detailed Plan of Costs
The importance of this cannot be overestimated. Take the time to sit down and work out exactly how much you know for certain that you need to start your business, or for improvements to your business. Of course, there will be some level of guesswork within the business plan, especially if this is the first time you’ve had to go in search of funding, so don’t be shy about asking for help from a business advisor who has done this all before on numerous occasions.
Look at the Options and Devise a Specific Pitch Strategy
If you’ve taken the hint from the previous point and got a business advisor on board, their experience and knowledge can be invaluable at this stage. You may be looking for a bank loan, a business grant, investors, business angels or friends and acquaintances to come on board and invest in your business. Investigate each route thoroughly and way up the pros and cons to you. Once you’ve decided on the best avenue for you it’s time to create a scintillating business pitch that is right for that person, or group. Each person will be different and it is in the research stage of potential investors that you should find out what makes each potential funder tick, their needs and motivations for helping you. This should give you a chance to formulate a pitch that really hits the mark.
Chase the Investors and Negotiate a Deal
It’s not all over once you’ve left the room after what seems like a successful pitch. You’ll have to continue the dialogue with the potential investor’s as they are unlikely to come running back to you, no matter how well you’ve pitched. Balance being pushy with polite and chase up as best you can. Once you’ve got a positive answer it is time to negotiate and finalise the funding deal. Negotiations are rarely straight forward so in your original plan try to account for potential time and additional legal costs associated with re-negotiations as it may take a number of rounds of discussion before all parties are happy with the final deal.
Raising Funds can be Costly
There are of course a few costs that you might not readily think of as you first sit down and discuss ways to attain funding. These have to be incorporated into any plan so you are fully aware of what you can expect to pay out at the different stages of funding. These include legal costs and any accountancy tasks linked to the funding, including due diligence, fees to business angels and intellectual property rights should you be offering investment for a stake in your business. There are also associated fees once funding has been secured and you may have to pay salaries to non-executive directors for instance or for investment monitoring fees.
Raising funds is difficult as a small business owner but it’s not impossible. Be open to all potential avenues to you, prepare for the worst outcomes but be positive that you’ll secure the funding that you’re looking for to make your business a success.
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