Funding a small business is usually the one area most new business owners struggle with. It can be difficult to find investors or secure loans when a business has not even opened its doors. It’s the classic catch-22, though, most lenders or investors want to see the business is successful before giving money but you need the money in order to start your business. Fortunately, you can prove your business is a worthy investment just by having these three things in order.
- Business Plan
To begin with, before you ever try to seek funding, you need to have a solid business plan. Your business plan is basically an outline of every detail about your business. It should explain what your business is and what it does. It should outline the financial plan for the first few years of the business. In addition, it should give details about the people running the business, the structure of the business, and its location. The plan should have explanations of the different business aspects, including marketing and human resources.
Anyone reading your plan should have a complete picture of what your business is. The plan should address any possible questions that could come up. They should be left with no questions about anything. You don’t need an MVU Online degree to figure out how to write a plan, but you might benefit from a course in business.
Solid Personal Credit History
When you are first starting out, your business is going to pretty much be synonymous with you. You are basically your business. Without you, there isn’t a company. Due to this, your personal credit will likely play a huge role in obtaining funding.
Before you start trying to seek out investors or get a loan, you should make sure your personal credit is in good shape. You should have very little debt and no collections. Your credit score should be high. If you have issues, work on fixing them before you try starting your business.
Finally, you need to understand the value of your business. You can check out this infographic to learn more about valuation. In the beginning, this likely won’t be based on the actual monetary value of your company. You could figure out the value of your assets, but this is usually not going to be enough. Instead, you should consider other valuable assets your company has that may not be tangible.
Startups may have things like patents, trademarks, copyrights, brand recognition, and a loyal customer base. These things are all valuable and shouldn’t be ignored when figuring your businesses valuation. You want to show that there is something of value about your business that would encourage people to invest in it.
When it comes to getting funding for your new business, you have to be aware of these things that can really help you to secure the funding you need. Having a good business plan, a solid personal credit history, and a good business valuation are all good ways to get you in the right position to secure any funding you need.