Start-up entrepreneurs: 5 practical tips to get the funding you need

Your business plan is a masterpiece. Your projected financial statements have been meticulously prepared. Congratulations! These precious documents will establish your credibility with potential banks or investors you meet. Here are five tips to ensure that you get the funding you need to succeed.

1- Know your business plan right down to the tiny details

Be prepared before you meet with a bank. You need to be an expert about your business plan, right down to the tiniest detail, and be able to answer any questions that come up. Your potential investors need to understand the risks related to your business’ launch, and the robustness of your plan to manage these risks.

There are also other ways to optimize your first-meeting prep. For example, anticipate potential objections so you can master the answers. You might even invite a specialist from your field to come along to explain the complexities of your expertize to your audience.

2- Prepare a watertight funding application 

The financing application provided by your lending institution completes your preliminary business plan, and fleshes out the nature of the project you’re seeking to finance. The business plan needs to explain the positive impact that your desired financing will have on your business’ growth. Purchasing a piece of equipment or machinery that enables you to reduce your cost per unit is an example of a positive financial impact that will pique an investor’s interest. Demonstrate that you’ve thoroughly prepared your application—it’s your pass to get to the next level with your business.

Your financing application will be assessed using various criteria:

  • previous professional experience;
  • risks associated with your specific business sector;
  • guaranties offered to compensate your investor for their risk;
  • the business’ ability to pay, and the personal financial history of the business’ leaders (from a bank’s perspective, a previous bankruptcy may be seen as affecting your credibility and credit).

3- Build a dream team

Being well surrounded and meeting your bank’s requirements is imperative at this stage. Build a team of true professionals that have complimentary skills to yours. A mentor can help guide you in terms of thinking strategically about your business, while a lawyer can clarify the legal aspects of your endeavour—for example, incorporation. An accountant—and their experience—is worth their weight in gold

4- Select the most appropriate source of funding

In terms of sources of financing, there’s more than one way to get funded. Generally speaking, you can finance your endeavour using loans, equity, or grants and subsidies. Sometimes you can reach your financial needs by combining various sources in order to attain the liquidity you need.

Combinations include:

  • capital from those close to you;
  • financial assistance provided by the government, or an economic development and entrepreneurial support organization;
  • a loan from a private organization or financial institution;
  • use of personal funds.

Using personal funds is often necessary if you seek to obtain a bank loan or governmental financial assistance.

Venture capital firms and angel investors are usually attracted to young businesses with significant growth potential. In addition to financial assistance, and to reduce the risks they face through investing, these bodies often also provide strategic coaching. As a result, you get to benefit from their advice, networks, and experience—it’s a great match if your idea meets their needs!

5- Test your sales pitches on people you trust to be honest with you 

You’re passionate about your business idea and you could talk about it forever! Yet you also don’t want to waste a potential investor’s time with a meandering speech. Your goal? To help them quickly and clearly understand your project.

Here’s what you need to include in your pitch if you want to impress:

  • know your business plan, right down to the nitty gritty details;
  • explain why they should finance you;
  • demonstrate that you’re an expert in your field, its risks, and its opportunities;
  • illustrate your unique sales product (USP), and your action plan to surpass your competitors.

The final tip for an effective and professional pitch in the meeting that counts? Repetition. Practise your business pitch repeatedly to people you trust to be honest with you. Ask them to put themselves in the shoes of your potential investors, and then convince them of your merit. Someone you trust will be able to help you sharpen your pitch, from what needs to go (are there too many technical details?), to what needs more explanation.