Small business owners enjoy a lot of different benefits, like watching their vision come to fruition, creating work-life balance on their own terms, choosing their team of partners and employees, challenging themselves to grow, and so much more. For every pro, there is a con, though, which means small business owners definitely face their own set of challenges. From getting healthcare for employees to dealing with taxes, there are a lot of difficult aspects to running your own business.
One of the most difficult challenges that small business owners face is getting the necessary funding. Whether they’re just getting started or need funds to keep going or get a new project off the ground, small business owners have found that getting funding can be harder than they originally thought. Whether it be due to bad credit, lack of collateral, or the inability to qualify for a loan with a reasonable interest rate, small business owners may feel like they don’t have any options and are at the mercy of the banks and lenders.
If you’re working on starting a small business or are a small business owner in need of funding, you may feel like you’re struggling to find the resources you need to get funding for your business, but don’t give up just yet. There are some things you can do to and resources you can use to get in front of the right people and seal the deal on the extra capital you need to get your business off the ground and make it a success.
First, do everything you can to increase your chances of getting funding. One of the most important things you can do is have a business plan – and that business plan should be solid. If you’re asking lenders for money, they’re going to want to see what you plan to do with it and how it will benefit them. Explain carefully and showcase both the short- and long-term potential for a return.
An important step in preparing your business plan is to lay out a solid, reasonable, workable strategy for getting your business off the ground. Outline realistic financial projections that cover both the best- and worst-case scenarios. If you’ve ever seen the show Shark Tank, you know that some entrepreneurs unrealistically estimate the financial return the business will have in a certain amount of time – perhaps because they assign a monetary value to the emotional investment they have already made. Whatever the reason may be, investors aren’t interested in what you personally think your business is worth – they want to know what the numbers indicate your business is and will be worth.
Next, explore all of your funding options and decide which one is best for you. There is no shortage of funding options available to entrepreneurs and small business owners – but that doesn’t make them all a good choice for your needs. Small business loans may provide you with the funding you need, but the interest rate may be too high to make the loan worthwhile. You may be interested in bringing on investors, but if you’re not willing to give up enough stake in the company, you may have trouble finding someone to invest.
Crowdfunding is another funding option that’s becoming increasingly popular, but it may not be the best option for you, your business, and your business model. Fortunately, there are tools available and companies dedicated to helping small business owners get the funding that they need.
After you’ve looked at all of your options and decided which is best for you, make a presentation plan. Your plan should be tailored to your audience and should focus on the investor and what’s in it for them. Lenders rarely, if ever, give money to something they don’t believe in and that won’t give them something in return. Whether you’re offering a percentage rate and time-frame for their return, a stake in the company, a royalty, or some other incentive, it should be made obvious in your presentation so that the investor knows just what’s in it for them. Don’t forget to point out what you have invested on your own, too. Investors and lenders tend to avoid opportunities in which the owner hasn’t invested.
Finally, after you’ve drafted your business plan, decided which type of funding is best for you, and perfected your presentation, make the pitch. If you’re pitching to more than one type of lender, be sure to tailor your presentation to each individual and who or what they represent.
Although as entrepreneurs and small business owners you may feel like it’s a struggle to find the funding that’s right for you, there are a number of options out there that can help you get exactly what you need.
What are some of the biggest funding challenges you’ve faced? What advice do you have for other entrepreneurs and business owners looking to get funding?