Rookie Errors to Avoid when Sourcing Start-Up Funding
For the vast majority of new business start-ups, the most critical piece of the puzzle when looking to set the wheels in motion is funding. Even with the most outstanding ideas and all the dedication in the world, it all comes to nothing if you cannot secure the essential capital to get things off the ground.
Which is exactly why it’s so frustrating that so many would-be start-ups get it so wrong when seeking funding. It’s hardly an easy job in its own right – shooting yourself in the foot in the process not exactly being the best way to go.
So in the interests of those who’d prefer to learn from the mistakes of others, here’s a brief introduction to five small business funding flounders to avoid at all costs:
1 – Limiting Sources
First of all, given the fact that there are dozens of avenues to explore when it comes to available sources, why limit yourself to one or two? So what if your loan application and grant request were turned down – there are still plenty of options on the table. From sponsorship to peer-to-peer lending to crowd-funding and the every-faithful credit card, limiting yourself to just a few potential sources is nonsensical.
2 – Asking For Too Much Money
The problem with requesting insufficient money demands no real explanation. However, asking for too much money can be just as problematic. The reason being that unless you can comprehensively justify every penny of the funding requested, it’s unlikely anyone is going to agree to provide it. Not only this, but the more you ask for, the more challenging it becomes to secure the cash in general. Your request should be tailored meticulously to your goals and your needs – it’s as simple as that.
3 – Not Presenting Credible Figures
When dealing with potential financers, you need to speak the language of numbers. More specifically, you need to be able to present believable and inspiring figures/projections of truly flawless quality. One of the biggest mistakes many start-ups make is that of fudging their figures to such an extent that when presented, they come across as far too unrealistic or garbled to take seriously.
4 – Incomplete or Absent Business Plan
If you don’t have a comprehensive business plan to show prospective financers, you’ve no chance. You can pitch your idea and your greatness all you like, but it’s the content of your business plan that will show them a) how you plan to bring your vision to life and b) why they should back you. Fail in either of these capacities and they won’t even think twice about turning you down.
5 – Expecting Overnight Funding
Last but not least, the road to securing small business funding tends to be longer and more complex than most expect. Delays are simply part and parcel of the process, though even in the instance of a smooth and successful funding request it can take months to receive the funds. If you are banking on a near-immediate payout, you might want to think a little more realistically. Don’t find yourself stuck in a time-critical situation having expected a prompt payout, which in reality most likely isn’t going to happen.
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