Business Funding For Dummies

Helene Panzarino

• Publisher: For Dummies
• Year: 2016
• Print ISBN: 9781119111597
• eBook ISBN: 9781119111603
• Edition: 1
• Topic: Business
• Subtopic: Finance
• Index: Business

Get the business funding you need to secure your success

The issue of funding is one of the biggest pain points for small- and medium-sized businesses—and one that comes up on a daily basis. Whether you're unsure about how to go about getting a loan, unfamiliar with the different options available to you or confused as to which would be the right solution for your particular business, Business Funding For Dummies provides plain-English, down-to-earth guidance on everything you need to successfully fund your business venture.

Friendly, authoritative, and with a dash of humor thrown in for fun, this hands-on guide takes the fear out of funding and walks you step-by-step through the process of ensuring your business is financially viable. From crowd funding and angels to grants and friends, families, and fools, it covers every form of funding available—and helps you hone in on and secure the ones that are right for your unique needs.

• Includes mini case studies, quotes, and plenty of examples
• Offers excerpts from interviews with financiers and entrepreneurs
• Topics covered include all forms of funding
• Covers angels in the UK and abroad

If you're the owner or director of a small-to-medium-sized business looking to start an SME, but have been barking up the wrong tree, Business Funding For Dummies is the fast and easy way to get the funds you need.

Part I

Getting Started on Funding Your Business

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In this part …

Use your knowledge of business principles and cycles to give your business the best chance of obtaining funding in a changing and challenging economic environment.

Understand the stages and cycles of your business and how each impacts your funding options.

Lay the foundations to help you successfully raise funding for your business.

Assess your skills and readiness to go for and accept funding for your business.

Chapter 1

Preparing for Funding at Any Stage of Growth

In This Chapter

Getting an overview

Laying down the fundamentals to funding

Measuring your business’s viability

Sustaining your business

When you’re embarking on the mission to fund your business, you need to carry out the same level of preparation as you would for any important mission: advanced reconnaissance, tactical thinking, logical planning for any eventuality – and add a large dollop of courage and confidence in the abilities of yourself and your team to survive and thrive.

You may have a fantastic business idea that you’ve nurtured, protected and evangelised about, but the fact is that however great you think your brain child is, it may never receive a penny of funding. Or it may be the exact opposite – and funders get your idea, think it’s a winner and pour money into it. But you now need to deal with all the challenges and responsibilities that getting funded brings.

The UK is currently experiencing a period of economic growth that surpasses that of the pre-2008 crash – unemployment is down, and tech businesses are the new black, receiving millions of pounds of investment from the four corners of the Earth – but the number of people choosing to go it alone is also up, and competition for all forms of funding is on the rise.

The unfortunate reality is that many new businesses don’t survive the first year, and many others don’t grow beyond a lifestyle business that generates enough income to let you enjoy a good standard of living but doesn’t aspire to ambitious revenue goals. Getting the right form of funding at the right time can be the thing that makes your business one of the winners in this competitive landscape. Equipping yourself with as much knowledge, awareness and resources as you possibly can will go a long way to helping you to determine your funding needs and to know when and where to go to look for the appropriate solution.

When it comes to funding, your bank manager is no longer your only option. Traditional funders are nestling alongside a new breed of alternative financiers challenging the status quo, and everyone is jockeying for position. It’s a brave new world in some respects, and it’s full of promise and exciting opportunities for your business. Technology has been a game changer when it comes to business funding, and it’s a constantly changing scene – whether it’s a platform, a crowd or a direct lending application. The supply of finance is now more diverse and accessible than it’s been in a long time, so explore, but proceed with caution and advice.

In fact, you can now find so many options to fund your business that you need to stay networked, stay alert and stay updated if you’re going to maximise the finance in your business and get it at a good price.

How you prepare and how you implement your funding plan can make the difference between success and failure. This chapter sets the scene to make sure that you’re well-prepared for the exciting, and hopefully rewarding, journey ahead.

Understanding the Accepted Wisdom of Business Strategy

When you’re consumed with passion and enthusiasm for your new business or growth idea, and you’re convinced that it’s as obvious as the nose on your face that someone just needs to throw money at you for it to be a huge success, it’s sometimes hard to see the bigger economic, business and funding picture that surrounds you. If you’re going to be a player, you’d better make sure that you know the rules of the game.

Establishing and positioning your business within your industry and giving it a loose, but logical, framework early on gives your business a structure to hold it together and to grow on. You can tighten and refine your structure as your business grows.

I’m not talking about constricting your innovative concepts into a box; I’m talking about keeping a loose lid on the box, so everything that’s good and useful doesn’t escape.

A framework helps you and your business stay focused and be clear about what differentiates you from the rest of the herd. It gives you an easily recognisable and understandable means of communicating within your organisation and to your financiers.

Staying focused and informed

Recently a very well-known business investor asked me why Americans think a business plan is still relevant to a funding application; he doesn’t think they are. I didn’t hesitate for one second in saying, ‘Maybe it’s something to do with knowing where the business is going and showing an investor or a lender that you know’, which is what I genuinely feel. I also think a business plan helps you to get focused and – when used properly – to stay focused.

I’ve lost track of the number of times I’ve read or heard successful businesspeople harp on about the need for focus in order to achieve your goals and success. Sorry to disappoint if you were expecting me to say ‘Rubbish. What do they know?’ Because I have to agree, especially when it comes to raising money for your business. You need to be fully engaged with, and focused on, the process and achieving your outcomes with regard to both getting the funding and hitting all the targets and milestones linked to the money along the way. And sometimes, just writing the plan opens your eyes to the things you haven’t thought about or potential problem areas you overlooked.

As it is with anything that demands unbroken concentration, it’s not uncommon to lose your focus over time and have to rediscover what your core purpose is, especially if your funding is linked to this purpose.

In your business, focus takes on a number of forms, in both the business process as well as in your team. Maybe it shows up in pricing strategies, product differentiation or cost-cutting exercises, but it will always be something to keep your eye on. When you’re in the throes of running your growing business, it’s easy to take your eye off the ball or forget some of the reasons you did this in the first place.

Refocusing and rebranding

Sometimes, staying focussed on what it does best can lead a business to make significant changes, going so far as to change its name. For example:

• Winkler Plastic made the decision to rebrand itself as Nuconic Packaging – a clever way of making what it does sound like its name. What Nuconic does best is make new containers and plastic. The name change was an effort to redefine and safeguard its position in what is a highly competitive food-packaging market. Nuconic invested in new technology and capabilities and certification and created razor-sharp customer service to differentiate itself.
• When 37 Signals, the web application development business, changed its name to Basecamp, the name of its most popular product, it regained its focus and co-ordinated its vision, doing more business with a smaller, more focused team.

Appreciating the forces at work in your sector

Having a general understanding of the principles behind business strategy, and a focused idea of how strategy and business planning affect your funding efforts, is a good starting point in your preparation stage.

The next thing you want to do is go a bit deeper, and look at the drivers in your specific industry or sector. You want to be able to clearly differentiate yourself and see off your competition while simultaneously maximising opportunities in every area of your business – from supply chain to end-user. You want to keep as much cash in your business as you can while continually strengthening and monitoring the key performance areas that underpin your ability to successfully raise finance at all stages of your business.

As you consider your business sector, keep these points in mind:

• Identify a gap in your market and prove demand – figure out the problem and what your solution is.
• To succeed, you must do something better or do it differently to your competitors. Know what’s unique about your business and what your value-add for the customer is.
• Be aware of the impact of external forces on your business – the economy, environment, regulations and so on – and have contingency plans.

And, no matter what sector you’re in, use these tips for success:...

Table of contents

• Cover
• Title Page
• Table of Contents
• Introduction
• Part I: Getting Started on Funding Your Business
• Part II: Creating a Compelling Funding Proposition
• Part III: Exploring Your Funding Options
• Part IV: Going for Growth
• Part V: The Part of Tens
• About the Author
• Cheat Sheet
• Advertisement Page
• Connect with Dummies
• End User License Agreement