- August 31, 2018
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Business Plan: Six Tips for Getting Funded
When you are going to approach lenders for funding, one of the most important weapons in your arsenal will be your business plan. Writing a strong business plan gives potential investors the information they need is critical for the success of your small business.
Once you have composed a well written business plan, tailor it to request financing. There are six areas which you must clearly address in order to convince lenders that you are a good candidate.
1. A business plan with realistic strategy.
Show investors a sound strategy for getting your business running. It should be clear and well thought out. Include financial projections which cover a wide range of possible situations. Don’t sugar coat anything. Include what you think is most likely to happen, then discuss best and worst case scenarios and what your response will be to them.
2. Target your market carefully.
Identify your product’s target market in your business plan. Investors like large markets because they have strong purchasing power and thus the ability to provide a large profit. Investors also like markets with the potential for high growth. Tailor your product to a target market that meets both of these criteria and investors will be more open to your application. Make sure your company’s edge over the competition is distinct to prove that this market will truly be interested in what you have to offer.
3. Demonstrate potential for fast profit
Your business plan should show a high rate of return for the investors in a relatively short period of time. They want to see a potential for a good profit quickly. If you can realistically do this, you chances of getting funded are better.
4. Risk your own cash.
Prove how much you believe in this company by taking some personal financial risk. It impresses investors to know that you are seriously committed and passionate enough to put in more than sweat equity. Having your own stake in the company will motivate you and the investors. After all, if you won’t put some money into it, why should they?
5. Don’t be afraid to ask for as much funding as your small business need
This ties back to your realistic strategy. When you right a business plan tailored to request financing for your small business, make sure you ask for enough money. Lenders will want to know that the numbers will work, and they also know most entrepreneurs don’t borrow enough money. Show that you know your facts and figures and get the right amount. You may not get a second chance.
6. Show that you are in control of the future of your small business
No matter what your service or product is, you need to prove to investors and lenders that you can control both the quality and the delivery. Lenders are leery of funding businesses that may be at the whim of forces outside their control. Additionally, highlight your employees. Explain how they have the experience or skills to make the business successful.