Business is a wide, complex term. People use it to describe many different types of financing needed for various situations:
- Starting a new business
- Expanding the existing one
- Covering unexpected costs
Although it is difficult to find financing in any economic climate, there are numerous available funding options that you can still access. In this detailed guide, we will teach you about them.
Finding the capital for starting your business
The emphasis here is on how to accumulate the funds for starting your company and how to attract investors for it. To accomplish both, you will need to pitch for business funding in the right way. Pitching for business funding is, on the one hand, selling your dream, but also demonstrating that you’re cool-headed and sensible about it. It is a balancing act before anything else. Some of the most important things to tell to an investor are:
- The market opportunity – explain what needs and wants you will try to fulfil and predict the size of the market
- Market analysis – provide some research that proves the opportunity is there
- Your business model – present how you’ll transform the opportunity into cash
- How you’ll resource the company – identify the skills you already possess versus the skills you’ll need
When pitching, you’ll also have to share detailed financials and show financiers that you’ve planned everything – the good, the bad and the ugly. This includes having a thorough budget with the inclusion of allowances for unpredicted expenses and being specific about how you plan to spend the funding. Ultimately, you’ll need to present how they’ll make cash with you. In other words, what’s in it for them.
Another important aspect when looking to secure funding from investors is creating an amazing pitch deck. The typical startup pitch deck consists of two dozen slides in a PowerPoint presentation and is intended to showcase your enterprise’s products, technology or team to potential investors. Since you’ll have to be concise while winning over potential funders, it’s crucial that your pitch deck tells a compelling and interesting story.
For starters, your pitch deck should include visually interesting pictures and graphics, and convince the viewer about the existence of a large market opportunity. You should send it in a PDF format to prospective invePhoto by Helloquence on Unsplashstors before the meeting, rather than forcing them to get it from Dropbox, Google Docs, or some other barrier-putting online service.
On the other hand, don’t make your pitch deck longer than 20 slides and if you do feel the need to add more data, include it as an appendix. Moreover, don’t have too many slides filled with words, and don’t give excessive financial data, as this will be given in a follow-up.
Besides pitching to individual investors, you can use crowdfunding as an option to finance your business idea. Basically, crowdfunding is financing your company through the donation of cash from the public. This usually happens through crowdfunding websites.
Typically, you’ll post your startup idea as a campaign onto the site, with a description of your project. If people want to support your idea, they can donate cash to help achieve your objective. On some sites, you’ll have to set a monetary goal, and a deadline to reach the goal by. To motivate people to donate, you can offer rewards and incentives based on the amount they donate.
Business growth phase
In the moment where your company is already positioned business funding can be achieved either via government grants or business loans. Unsecured business loans, to be more precise. People often think that unsecured loans are just for small enterprises, since you can gain access to only small amounts of cash with this loan type. Consequently, bigger corporations still need to go to the bank for a debt.
Fortunately, this isn’t the case. Many no security business loans providers offer access to substantial funding. Their numbers can range from $5,000 to $30,000. All of this means that even bigger corporations can make use of these loans to gain fast access to funding.
As with other kinds of business loans, the funds you can receive depend on the financial health of your company. A big, stable and healthy business will often be able to access appropriate funding for expansion and growth.
Stable businesses can also apply for government grants. While most government grants aren’t for starting up a company, they are available to help you grow your business. Information regarding them is available freely through official government sources. If you’re thinking about going through a private corporation for help with getting government grants for your company, take care and check whether the services that you’re paying for isn’t something that is available for free.
The final phase of business growth
By now your startup is likely five to ten years old and the venture capitalists are ready to receive their ROI – Return On Investment – when you sell your company or go public with an IPO (Initial Public Offering). Venture capitalist firms can enjoy up to 700 percent return on investment when their companies go public.