Very few businesses are lucky enough to be able to bootstrap their way to success, most rely on securing business growth funding. Getting funding at the right time is critical to surviving yet alone thriving and growing. Without funding it is much harder and slower to grow and expand into new territories or markets. Here are my top four tips for successfully securing business growth funding.
- Know where to look and what type of funding is the best match
There are numerous sources of funding from Bank Loans to Crowdfunding and Equity investment to Trade Finance, Grants and R&D Incentives for innovative companies. Often a growing business will need to draw on a mix of sources. Depending on the stage of growth and type of business some will be more suitable than others. Each type comes with its own positive and negative aspects for example if you’re seeking a bank loan, you will probably have to give a personal guarantee and of course pay back the loan with interest. If it’s equity investment you’re seeking you need to be prepared to give away a share of the company and most likely some of the control you have over the company as well. Crowdfunding does not work for all types of business, it’s best for consumer based projects and while it often requires a low financial investment it can also require a huge investment of time to market your campaign.
No-one is going to fund your business unless they can see what will be achieved with the funding, so having a good business plan is fundamental to being successful in securing funding, especially Equity Investment or a Bank Loan. If it’s growth funding you are after, you need to include realistic financial projections to show what the growth trajectory is expected to be and how you will achieve it – Is it new products or expansion of existing products into new territories or something else? Sales projections and the cost of expanding should be clearly set out. Details of your management term and organisational structure are also essential elements of a growth business plan.
- Build and maintain your top team and talent pool
It’s widely accepted that most businesses sink or swim on the strength of their C suite talent pool – i.e. the people they bring in and nurture to manage the company. The importance of having a skilled and experienced management team cannot be overemphasised. Equity investors in particular will look for a strong and united team. So if you are on a mission to successfully secure business growth funding in the near or intermediate future, it’s even more important (it’s always important) to put effort into continually building and maintaining a cohesive team with the right mind-sets and leadership capabilities.
- Get your pitch right and that includes keeping it succinct
Whether you’re pitching to investors, seeking to impress a bank manager or aiming to excite people to support your Crowdfunding campaign, you need to get under the skin of the funders and see things their way not your way. A big mistake that people often make when pitching their business is to put too much emphasis on their ‘super-duper product or service’ when funders are more interested in how the financial plan stacks up, that’s especially true for an equity investor – What’s in it for them! So spend 80% of your air-time on the financials and how you will achieve profitable growth, plus why your team is capable of delivering the plan (track record) and 20% of your time on explaining your products and services. Plus keep it short – people don’t want to read or hear War and Peace so set a target of no more than 20 slides. Keep your pitch punchy and start with your 15 second ‘elevator pitch’ – vision and mission. Plus clearly communicate the problem you are solving for your customers – What is the problem you are solving? Why is it important to solve? Who most needs that problem solved?
Linda Eziquiel is a specialist in helping innovative companies fund new product developments using research and development tax credit.
Funding is one of the areas we cover in our TwentyTwenty Insight business review process, where we provide a snapshot of the health of your business with suggestions on what you might do next in terms of growing your business. If this is of interest then please contact Linda.Eziquiel@lgbusinessadvisors.co.uk