Funding tips for small businesses

Obtaining funding should start with a solid business plan. When you write a convincing business plan, then your chances of obtaining   funding   are   greatly   enhanced.   Lenders   and investors   want   to   see   proof   that   customers   want your product  or  service  and  are  willing  to  buy  it  for  a  price  at which you can make a profit. The more tangible evidence you offer of this claim, the better chance you have.

Other factors that improve your chances to get funded are:

Your plan should show good profit potential in a short period of time. The  higher  the  rate  of  return  you  can  offer  investors  and  the  faster you can produce it, the better your chances. Your plan should target a clearly defined market with enough size and purchasing power to produce a profit.

Investors tend prefer large markets with high growth potential.  They avoid businesses that attempt to be “everything to everybody.”  Your plan should clearly explain the “competitive edge” your product or service has over rivals.

You should show an ability to control both the delivery and the quality of the product or service. Also, that managers and employees have the skills and the experience to make the company a success. Show  that  you  have  made  a  personal  investment  in  this  business venture.

If you do not believe in your own venture enough to invest at least some of  your  own  money  in  it,  how  can  you  expect  others  to?  “Sweat equity” unpaid personal time and hard work — can be important, but lenders and investors like to see an entrepreneur with an important financial   stake   in   the   business.   It is   a   tremendous   source   of motivation.

Lay out a clear, well – conceived, workable strategy for getting this business up and running. Show realistic financial projections covering most likely, pessimistic, and optimistic scenarios. Potential  lenders  and  investors  want  to  be  sure  that  the  “dollars  and cents” of the deal make sense, and that’s why realistic projections are important.  Most entrepreneurs underestimate the amount of money needed for start – up. Do not get caught short!

STEPHEN ONYEKWELU