A good friend of mine works at Sertant capital, a business which specializes in providing funding for the equipment which many businesses use. Within the company it is his role to speak with businesses and hear their pitches for financing, and some of the stories he tells me are quite absurd to say the least. Funding of course is a massively important area for your business to focus on and no matter whether you are looking for a bank loan, angel investment or equipment funding, there are some key considerations which you have to make that will increase your chances of investment. 

How Much and What For 

The most important thing that you have to be thinking about before you go ahead and try to get investment is how much money you are going to need, and what you are going to need it for. There is non point walking into a lender and asking for $20k without being to break down exactly what you need that money for. This means that you have to cost out everything, from equipment to marketing, staffing to building rental. Every single spend should be calculated and then this is what you take in with you when you are seeking funding. Nobody is going to give you money if you aren’t 100% sure what you are going to be spending it on. 

Long Term Business Plan

Another important aspect is that you have a full understanding of what your business plan looks like over the next 5 years. This should include the growth that you expect and how the market will look in the years ahead. Lenders want to know that their money is being put to good use but they also want to know how and when the money will be paid back to them. When putting together a business plan you need to use the services of an accountant and you should always err on the side of caution when it comes to potential revenues and profits. If you are overly optimistic about how much you plan to make, then you may find yourself in trouble if that profit doesn’t end up coming in. 

Only Major Players

If you are refused funding for any reason then you must ensure that you find another way to go about self-funding the project. Some business owners have been caught out because they have been unable to find traditional funding, and so have gone with small time companies who charge exorbitant amounts of interest and offer terrible terms on the loan. The desire to get the business off the ground shouldn’t make you blind to poor deals, and if you can’t get the right funding then it is better not to have funding at all. Whatever you do, don’t get into a deal with a company with high interest and short terms, as it will be the undoing of your business.