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 SWOT Strategy
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
For the foundation funding of 10-20% of your total finance requirement, I recommend a combination of self funding and private investor funding. Use this initial capital to position your company to be attractive to venture capital and commercial funders like a bank. This way you will have a better Funding Structure from which to work which will result in better terms and will shorten your finance acquisition window. 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 Small Business Consultant, 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 Process 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 Guest Blog Author – Frank Goley, Business Consultant for ABC Business Consulting
Frank Goley works for small and medium size companies in the capacity as an experienced business consultant, business turnaround consultant, business plan expert, business plan writer, business coach, small business consultant, business planner, marketing consultant, online marketing consultant, seo consultant, and business plan consultant for ABC Business Consulting. Frank is considered an expert in writing, developing and implementing business plans, business turnaround plans, funding business plans, marketing plans, strategic plans and web marketing plans. Frank offers comprehensive business consulting, business coaching, business turnaround consulting, along with web seo, web development and web marketing consulting, to small and medium size companies. 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.
