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How to source funds to expand your business

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StrategyDriven Managing Your Finances Article |Funds to expand your business|How to source funds to expand your businessAs a small or medium enterprise business owner, you are probably always looking for growth opportunities. To realize such opportunities, you need a lot of money, and often you may not have that much to help you realize your dreams. You will need to source funds from other sources to make the most of the opportunities that come your way. But sometimes, due to the lack of financial literacy or good financial advice, you may end up making the wrong choice. For instance, you need to know the difference between grant & loan to know which one best suits your needs. Here are some options that you may consider when sourcing funds to expand your business.

Bank loans

Bank loans remain the most common option for most businesses looking to expand. Bank loans provide medium to long-term finance for your business. You will need to provide some documentation about your business, a plan, and collateral to acquire one. To be safe, get a financial advisor to help you understand the loan terms before deciding to go in for it.

SBA-backed loans

Only available in the United States, The Small Business Association offers small businesses various loans via participatory banks all over the country. SBA-backed loans are set up to help small businesses secure funding to grow their company specifically. Mind you, though, the SBA itself is not responsible for the loan. You will need to have a good working relationship with the loan officer at your local bank to gain access to such loans. You could also find the nearest Small Business Development Center SBDC and register to access their small business loans.

Venture capitalists

Venture capitalists are people who choose to invest in businesses to help them start-up or expand. Venture capitalists are looking to make a good return on their investment and, as such, may get involved in running the business or offer their expertise. Due to the huge amounts that venture capitalists look to invest in a business, you must have a solid business plan and serious projections for the future for you to be considered. The basic sums venture capitalists invest are from $500,000 to $10 million, so you must have a high growth strategy to entice them to listen to your pitch.

Angel investors

Much like venture capitalists, angel investors are looking to invest in businesses and see them succeed. The significant difference here is that instead of looking out for returns, angel investors rather want to transform their investment into the equity of your business. But they may not invest as much as venture capitalists. To seriously consider angel investors, you must first have an exit strategy for your business and solid projections for the future. If you aim to hold onto your business, then angel investment may not be for you. The goal is to gain equity, help the company grow and then sell it or when it goes very well, do an IPO.

Crowdfunding

This type of source funding has seen quite a hike as there have been many success stories. It is pretty straightforward; you ask people to donate a sum of money for a particular project to exchange diverse rewards. These rewards are generally categorized into equity, debt, and donation. However, to participate in crowdfunding, you need to know the rules and requirements of the sites and carefully review your options before you proceed.

What makes a good investor pitch?

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StrategyDriven Managing Your Finances Article |Investor Pitch|What makes a good investor pitch?Pitching your startup to investors is a nerve-wracking experience for everyone. Even the great business leaders of today like Elon Musk and Bill Gates have had to stand in front of a group of investors, and ask them for money.

You only have a brief window of opportunity to make that first impression and hook in your audience.

Knowing what makes a good investor pitch is a large part of the battle, so what does make a compelling investor pitch?

Research your investors

You don’t want to take a cookie-cutter approach to your pitches if you are making more than one. Do your homework on each potential set of investors. What is their investment profile like? What successes and failures have they had in the past. You want to try and remind them of the former rather than the latter.

Investors will be able to spot a generic pitch a mile away, especially if it misses the mark with its target audience.

Confidence is key

You might be a nervous wreck but confidence is a must. Not only confidence in yourself, but in your business and your ideas. Why would someone give a lot of money to someone who isn’t confident in their own ideas?

There’s a fine line between confidence and arrogance, so don’t overdo it. Invest in having your pitch deck drafted by a professional Business Plan Writer, they can help to guide you through best practices in this area. Work on your presentation skills.

Business V emotion

A successful pitch needs both style and substance. You want to excite your audience by the prospect of investing in you and back it up with the cold hard facts.

Keep it short

It’s difficult to keep the magic happening for very long. Capture their attention, build up momentum and then get out and leave them wanting more.

Take them on a journey

Craft a compelling story for potential investors. It is great for nailing down the sequence of your pitch deck and takes your investors along with you on the story of your great idea.

Focus on investor benefits

As with all successful sales campaigns, focus on the benefits, rather than the features. You need to focus on what benefits and value you’ll be bringing to them, not the costs or features.

Know your business model inside and out

You’re going to get a lot of questions thrown at you. You can’t hide behind your pitch deck, no matter how great it is.

Your business model is the center of your pitch, you need to make it sparkle. Lose the investors here and it will be very hard to get them back.

Use visual aids in your pitch deck and presentation. Use examples of where a similar model is already being used successfully.

Be clear about what you want from them

What are you looking for from your investors? Partnership? Equity share? Remind people at the outset so that no one goes through the rest of the pitch for your startup under any kind of misapprehension.

5 Viable Options for Financing Your Small Business

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StrategyDriven Managing Your Finances Article |Financing Your Small Business|5 Viable Options for Financing Your Small BusinessFinancing a small business isn’t always easy, but there are plenty of solutions available, no matter how bad your credit rating is. Before you start looking for finance, however, make sure you have a strong business plan. Lenders will want to see evidence that your busines is viable, even if you don’t need a lot of cash to get the ball rolling. In addition, be prepared to put up some collateral, either your personal assets or shares in the business. Often, loans come with strings attached, not just interest!

In this article, we will look at the best solutions on the table.

Credit Card

When you don’t need a huge amount of capital, easily accessible funding options like credit cards are a useful tool. The great thing about credit cards is that they are flexible, so if you only need a short-term cash injection to buy supplies, a credit card may work for you.

It’s even possible to enjoy a 0% loan if you look around for a good deal. Plenty of credit card companies have 0% introductory offers for new customers but bear in mind your personal credit rating will dictate which offers are available to you.

Bank Loan

Approaching your bank manager for a business loan is another option, but this one takes longer to sort out. Banks don’t typically throw money at customers these days; they were too badly burned in the financial crash of 2009. You’ll have to provide a solid business plan, as well as detailed cash projections outlining how you plan on repaying the money. If everything looks good on paper, you should have no problem qualifying for a business loan.

Specialist Lender

While high street lenders have their place in the finance sector, they don’t tend to work for people with bad credit or niche requirements. For example, if you have CCJs in your credit report or you want to start an online business selling CBD products, mainstream lenders won’t touch you. You’ll need a specialist instead.

Luckily, specialist business models and bad credit doesn’t have to hold your business back. There are lenders who will consider most applications, no matter how off-the-wall, so don’t assume your business idea is doomed if you have a few late payments on your report.

Crowdfunding

Crowdfunding has allowed all manner of businesses to achieve their potential. Thanks to sites like Kickstarter and Indiegogo, startups like Pebble and Oculus have achieved phenomenal success. As long as you have a great pitch and people can see the potential in your business plan, the money will flow your way. In fact, crowdfunding has been so successful in recent years that many small startups have bypassed traditional funding sources altogether.

Make sure you understand the different types of crowdfunding before you create a pitch. They include:

  • Donation-based crowdfunding – ask for money with nothing given in return
  • Reward-based crowdfunding – ask for donations in return for a reward
  • Peer-to-peer crowdfunding – cut out the middleman and borrow money directly from investors
  • Securities-based crowdfunding – investors are given a share in the business in return for cash

Angel Investors

Angel investors are people with a lot of experience and significant capital to spare. They look for embryonic businesses that show a lot of promise. In return for capital, the investor is given a share of the business or the promise of a decent return on their investment.
One advantage of securing funding from an Angel Investor is that you can tap into their experience in the early days of running your business. After all, they have a vested interest in ensuring your venture is a success!

Lastly, don’t dismiss the notion of asking friends and families to contribute to capital if they can afford it. If they say no, consider whether your business idea is worth pursuing.

The Nitty-Gritty Aspects To Consider When Starting A Business

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StrategyDriven Starting Your Business Article |Starting a Business|The Nitty-Gritty Aspects To Consider When Starting A BusinessThe world is business is simple and complicated in almost equal measure. The idea is fairly straightforward, and once you understand the fundamentals, you can be off and on your way to something special. The complicated parts are the initial understanding of those basics and having the drive to continue working hard in order to achieve what you can.

We all have different parts of life that we’re good at and that we’re comfortable with. The majority of us tend to enjoy the more colourful and creative sections of any project. With that said, the majority of us will then tend to struggle with the more tedious aspects. Those annoying nitty-gritty parts can bore us to death, but they do need to be done in order to get things up and running. If you don’t know what these kinds of things are, then here are a few examples for you – hopefully, they give you an idea of the other side of the grind:

Where/How Are You Going To Stump Up The Capital?

In order to make money in this game, you need to invariably spend it first. If you have no money to begin your venture, then you’re going to struggle to get everything moving. Saving up for a while is the easiest way to stump up the money, of course, but you could look for investment via start-up loans and angel investors, too. You could also take the bootstrapping approach if you feel as though you can organically make something out of precious little.

Do You Understand All The Necessary Formalities

As we mentioned before, there are many little nuggets of info that need to be sorted out and submitted before you can even begin your business. You also need to confirm things personally for the likes of tax reasons. Right now, you may not have much of an idea of what these formalities are, but a quick internet search will point you towards registration, data laws, and health & safety aspects.

What Insurance Do You Need?

Every business should have insurance if it wants to be a successful one. You never know what issue(s) might be around the corner, so having that financial safety net could (and probably would) prevent you from disaster. You do, however, need to make sure your business policy offers the proper coverage, so scanning through a bunch of different policies is imperative.

How Much Will You Spend On Marketing?

Marketing will always be important in terms of selling a product or offering a service. The amount you spend on it needs to be taken into account, though. Are you going to work with an agency, for instance, or will you build up hours of screen time yourself? This kind of thing matters as you’ll want the best possible return on investment regarding such a significant aspect of a business.