Five creative ways to secure funding for your small business
A majority of small business owners now expect to be rejected for finance
Helping entrepreneurs access the investment needed to scale, Rob Straathof, CEO at Liberis, shares five experts tips on how to secure funding for your small business.
For many small businesses wishing to grow, knowing where to find and secure the right financing can be overwhelming.
Our own research revealed that over 60% of UK SMEs said they require funding to grow, but 57% of these were unsure how to source and secure that all important finance.
While there are a number of financing options available, the path to actually securing investment is not always straightforward. Finding the right option and then having the right tools to secure it takes a lot of work – even for the most seasoned entrepreneur.
Strengthen your position
Before you’re ready to reach out and source funding, it’s important to be realistic about your business’ position and your existing cashflow. Small businesses are dynamic, so make sure to constantly revisit your budget and refresh it regularly so you can ensure you’re working from accurate figures.
Authenticity and clarity are key so make sure, you have all the relevant credentials in place. Take stock of your current income, your expenses, overheads and record it all in a profit and loss statement.
It is important to also have this ready for the money you don’t have yet as thoroughly scoping your need for funding and the required cost will play an important part in defining a provider.
thoroughly scoping your need for funding and the required cost will play an important part in defining a provider.
Investors often look to support the most innovative businesses so it’s important to get noticed.
Make the most of small business events and networking opportunities – they’re everywhere. Just grab your business cards, questions and friendly introductions to get started.
Use social media channels, such as Twitter or Facebook, to build your network and help establish your brand. Research similar companies online and find out what they’re talking about, who they’re engaging with and what events they might be attending.
It’s easy to get carried away though so use your time wisely, you don’t need to go to every event you’re invited to, do your research and be strategic.
Get involved with your business community, whether it be local or industry based, and share your knowledge. Ask for as much advice as possible and learn from others’ experience: which providers worked for them and which didn’t; what key questions should you be asking your suppliers; and who caters best for your business type.
This insight will be key when reaching out for funding.
Your credit score
Funding providers will use a credit bureau to look at your credit score when applying for business finance.
Be aware of factors that can affect your credit score such as your track record for making payments (referred to as your credit history); any previous funding applications; and any financial connections you have to other people, including a business partner.
Having an understanding of what you can do to improve your credit score is also valuable. Make sure you keep a close eye on your business and personal files and cancel any unused cards.
Closing the deal
Closing the deal is one the trickiest elements when acquiring funding. Whether sourcing a bank loan, crowdfunding or investment from an angel, you have to be prepared to make a confident, failsafe pitch. Write a script, rehearse and ensure you have answers to any difficult questions that may crop up.
Be authentic, genuine and compelling – harnessing all the passion you had for starting your business on day one. Funding providers will want to understand not only the position of your business and how you’ll use the money, but also what your key challenges and current opportunities are too.
There is no “one-size-fits-all” solution when it comes to small business finance. You must do what is right for your business at the time. If you seek guidance from your peers and research your options fully, you will be sure to achieve your goals and reach your business’ full potential.
Rob Straathof is CEO at Liberis, an alternative finance provider
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