Most businesses, from established to startups, will require some sort of funding at some point in order to maintain operations or explore growth opportunities. The amount of companies that remain self-funded throughout their existence are few and far between.
The amount of funding that you can secure depends completely on the type of business and things like years in existence and borrowing history. Let’s look at a few tips that can help you secure your business funding, from new startups to established corporations — the lending fundamentals are the same across the board.
Embody professionalism.
One of the main points to keep in mind is to always embody professionalism when seeking funding. Whatever may be the fundraising avenue that a business may want to pursue, it is without a doubt that professionalism matters at all times in the eyes of the lender.
“Whether you are approaching a private investor or a traditional lender, you need to represent yourself as well as your business in a professional manner,” advises Darryl Howard of NuWays MD. Numbers aside, a potential lender needs to be confident that you, as a business owner, have what it takes to run the operation successfully. After all, it’s their money on the line.
This spills over to your preparation as well. If you are presenting forecasts, or providing financials, have them professional designed. If you look unprepared or if your information is thrown together in a sloppy manner it will reflect badly on your business.
Acknowledge that raising capital is actually a long-term goal.
The next point that needs to be kept in mind is that raising capital is actually a long-term goal. Launching a business is not that easy and raising funds for a business is much more difficult.
One should know that it requires time and hard work. Raising capital is a long-term process so one needs to have patience. Do not let traits like overenthusiasm threaten any chances of closing an important deal. “Even if you don’t currently need funds, you should operate in a way that prepares you for the time if and when it comes. Things like keeping accurate financials and making sure your personal credit score is maintained flawlessly, can help you when the time comes,” says Christopher VanDeCar, CEO of Optimally Organic.
Don’t become discouraged if you are initially rejected.
Another thing to keep in mind is to not get disappointed at an initial rejection while fundraising for your business. It is important to know that most business ideas are not initially funded. “Only a very small number of companies receive VC funds and many SMBs are denied business loans. That’s the reality of the situation,” explains Jake Braun of ChopperExchange, a marketplace featuring Harley Davidson motorcycles for sale.
Never lose hope if you are initially denied — many entrepreneurs whose businesses are known to have accomplished great things used to be in the same shoes — and they eventually made it. Sometimes you will have to approach several different funding sources and types of funding. There are traditional lenders, hard money lenders, companies that lend based on credit card sales, etc. Also, don’t forget to check out local financial options available for your specific region or industry. Talk to a merchant services agent, and become educated in what you will need in order to have a successful business, and it could be the tipping point in your lender deciding to trust that you are knowledgeable enough to be successful.
Evaluate all of your options.
Another important point that needs to be kept in mind while trying to raise funds for your business is to evaluate all the available options. You never want to rush into a business loan without fully understanding its terms and what it means for your business.
“One should have an idea of all the funding options available and strategize and modify depending on what the bottom line means for the operation and health of the business,” suggests Wireloo founder, Luqman Khan.
Options are not limited to just banks, as there are firms that are ready and willing to lend money to businesses. These organizations are willing to lend money on the basis of the strength of the business plan rather than simply taking in history and past performance, which is helpful for those just starting out, yet show promise and potential.