When you are looking for Business Finance, whether through traditional commercial finance sources or venture capital, keep these important fundamental business funding strategies in mind. You will find that your business funding initiative to be much more effective.
Prepare Good Strategic Plans
Ensure your Strategic Plan process encompasses your Product or Service Development, Marketing Analysis and Marketing Plan in order that your Financial Plans and Statements develop a Financial Strategy which is realistic and achievable. This will go a long way in obtaining the Funding your Company requires.
Find the Right Mix of Equity and Debt
I recommend you self-fund and use private investment funds for 10-20% of the total required Company funding, using this money to initially develop your Company to a point where Venture Capital Funds and Commercial Lenders are more open to the opportunity. This will significantly abbreviate your Funds Acquisition time and obtain better Finance Structure and Terms. A great Finance mix could be:
- Founders and Angel Investors Cash: 20%
- Venture Capital Early Stage: 20%
- Bank Finance: 30%
- Other Commercial Finance: 30%
The lower the Founders and Angel Investors Cash percentage, the more Venture Capital you will need, which in turn will require more Equity Sharing and less Control of your Company’s Board of Directors. Positioning your Company with an initial 20% Cash Investment, minimizes the strain Finance can have on a Growing Business. A 20% Cash Investment will develop your Company to the point which a VC Firm will be interested in your opportunity, leading the way to more Conservative Bank and Commercial Finance.
Do your own Funding Source Research
- Utilize networking and connections
- Compare your results to what an experienced Loan Broker can do for you. Choose the best avenue.
Don’t Excessively Shop your Deal
In my experience as Business Plan Writers, I find this a common mistake among companies. Excessively shopping your deal around commercial finance and venture capital sources will show you are not serious in obtaining funding from a particular source. Keep your funding initiative targeted. This also holds true in Business Turnaround situation.
Be flexible in your Finance Negotiations but Protect Yourself
Be open minded when assessing Funding Offers but be sure not to accept a term sheet if it is prohibitive to your business plan and funding strategy.
Close the Deal if it Matches Up with your Business Funding Strategy
If the proposed funding does not match up with your Strategy, utilize your back up sources or explore Alternative Forms of Finance, using the Alternative finance on a short-term Bridge basis to buy you time and secure the funding better suited for your strategy.
About The Article Writer – Frank Goley, Business Consultant for ABC Business Consulting
Frank Goley has an experienced background working with small and medium size businesses as a business consultant, business turnaround consultant, business plan writer, business plan expert, small business consultant, business coach, business plan consultant, marketing consultant, business planner and online marketing consultant, and seo consultant for ABC Business Consulting. He has been helping companies to succeed for many years. Frank wrote his first business plan over 20 years ago. He is an expert in developing business plans, marketing plans, funding plans, strategic plans, turnaround plans, web marketing strategies, and project specific business plans. Frank is the author of a business plan book, The Comprehensive Business Plan Workbook – A Step by Step Guide to Effective Business Planning, and he has over 135 published articles and e-books on business success strategies. He also writes the Business Success Strategies Blog and publishes the Business Success Newsletter.
