Top tips for Business Funding
Benjamin Day, Director at Cowgill Holloway Business Funding provides his top ten tips for Business Funding for events organisation, Pro Manchester. Click here for the original article.
1. Seek advice.
There are now more funders than ever with new products evolving all the time so it is important to speak to someone that has a good overall knowledge of the funding landscape. The advisor should then spend time understanding the business and its funding needs. This then allows the right solution to be found. Do not turn to Google as this will likely result in going with a lender that spends more on marketing rather than being the correct solution for your business.
2. Plan ahead.
Whilst the funding market has changed, allowing funds to be accessed quicker through the evolution of technology, it is still important to think ahead. If a business can understand when they are going to need funding over the coming year, not just weeks, it allows them to access the correct funding solution and also removes speed as a deciding factor when choosing the right funder. Unless the funding requirement is reactive to an event that has occurred, speed shouldn’t be a deciding factor.
3. Plan B.
Always have a couple of feasible options for your funding; either different lenders or, if possible, different products. This will allow you to compare solutions, but will also likely result in getting a better deal as the lenders will compete on price if they are aware that there’s competition.
4. Decide what’s important to you.
Work out what are the key deciding factors when choosing a funding solution for your business (aside from cost as this should always be a factor). Service, the use of technology, personalities, brand awareness, reputation and location are examples of possible deciding factors.
5. Ongoing relationships.
This is especially important when the facility is not just a one off payment such as a loan but a partnership over a period of time such as invoice finance. You need to take into account who will be managing the facility on a day to day basis both internally and externally and whether they have been part of the process. What information is the funder asking for on a day to day basis and are you able to provide this, if not it could cause issues in the future. What systems do they use and are they compatible with yours or can the use of technology help with the management of the facility?
6. Think outside the box.
Be open to non-traditional means of funding. There’s a size and shape to suit every business and your perfect match may be via a niched new technology. Each option will have its unique benefits and downfalls and it’s about finding one that complements your requirements. Appointing an advisor is the best way to ensure you’re finding your perfect match.
7. Get your ducks in a row.
Ensure you have all documentation prepared before engaging and have reviewed it stringently a number of times. A single miscalculation can be enough to deter an investor. Be 100% confident your facts and figures stack up and be sure that you know them inside out. Being over-prepared should be the end goal. No one knows your business like you, so if you’re unsure on certain areas how do you expect a potential investor to have faith? Think Dragon’s Den.
8. Start planning early.
Unfortunately, there are many layers to this process no matter what route you take. It will likely take weeks, if not months for approval. Businesses should be thinking about funding options months before they actually require the funds. Those who leave it last minute run the very high risk of cashflow issues. Something which itself may hinder your chances of receiving funding.
9. Deal with your personal credit history.
Your business is you and you are your business as far as finances go. Lenders will most likely factor in your personal credit history when determining if you qualify. If you have any concerns, an advisor can help address the issue and guide you through the best options.
You obviously believe that your business has legs to be in the position of looking for funding, but that belief must shine through and be evidenced. Whether that’s via your own financial stake or through ‘sweat equity’ of unpaid time. Investors are far more likely to buy into a business if it’s clear the owner is absolutely committed to it.
This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.
The information was correct at time of publishing but may now be out of date.