Starting a business can be expensive, so many look to outside funding sources to get their start. However, there are many funding challenges in business as investors can see that lending money to a new business can be a risky move. Especially for women, there are many funding challenges that must be overcome.
Funding isn’t always necessary when starting a new business. Many business owners choose to bootstrap their business, which is a means of self-funding business growth. However, bootstrapping isn’t always a viable option, especially when there is urgency to get your offer to market.
There are many sources of funding you can consider, so know which funding option would best suit your business:
- personal savings
- friends and family
- grants
- bank loans
- angel investors
- crowdfunding
- venture capital
The best way to get funding for your business is to be prepared. Investors want to see that you are a good candidate for investment, and preparation and confidence is key when presenting yourself to investors.
Let’s explore ways you can prepare yourself when seeking funding for your business:
1. Build your business financial literacy skills
One of the most important factors when seeking funding is showing that you have a strong business acumen. When you can talk the financial talk with investors and lenders, it increases their confidence that you are knowledgeable and can build a profitable business. Spend time learning key factors such as profit margins, cash flow, and breakeven points.
2. Prepare a business plan
A business plan is a roadmap for success. Investors and lenders want to see that you have a plan for profit for your business. Create a business plan to show them how you intend to grow your business. Include details such as target market, competitive analysis, revenue streams and financial projections. A solid business plan gives your investors a framework for understanding your business and their potential return on their investment.
3. Network strategically
Connections are everything in business. It takes a community to grow a business so tap into your existing network to help get the word out about your business and build your network with new contacts. Networking is about cultivating relationships that can help propel your business forward. Be intentional about expanding your network, as a strong network opens doors to funding opportunities, partnerships and other resources that may not have been accessible before.
4. Have an expert pitch
If you are pitching for funding, be sure that you have a well thought out and planned pitch for your investors. Your pitch needs to cover common items that investors look for, so take the time to understand what they are looking for. Include the problem your business solves, the market opportunity, your competitive advantage, and you must know your numbers and show them your plan for profitability. Be prepared for financial questions that they will ask you.
5. Don’t give up
When looking for investors, rejection is common. There are many stories of founders who have been rejected dozens to over 100 times before they got to their “yes.” It’s important that you do not give up when searching for funding. While rejection is discouraging, take the opportunity to learn from feedback that will help you get to a “yes” faster.
The bottom line is that founders often need to get creative when it comes to funding. You need to know what your options are when seeking funding and choose the option that is right for you and your business. Being prepared and showing how your business will financially thrive will increase your chances of success.