It is a fact that more and more people are taking the risk of becoming self employed and exploring their dream of setting up their own business. This growing trend has left business start up funds an ever growing commodity.
Most small business start ups fail within the first 5 years and a lot of the reasons for this come down to the way in which they attempt to generate finance for their businesses. In order to ensure the longevity of your business, you need to avoid the errors involved in looking for financial support.
One of the biggest mistakes you can make when trying to generate finance for your business start up is by going to 1 lender for 100% of your business finance. Also don’t go to a lender looking for 100% of your start up capital, if you can look to use between 20 – 30% of your own personal funds.
Before your going to have a chance at getting your hands on any money, you are going to need a solid business plan stating exactly where that money is going. It also help the lender to catch the vision of what your company is, where it is going and why they should assist you to make it a reality.
Another huge mistake that can be seen in 80% of business plans is under projecting spending. Don’t think for one second that you have more chance of winning a lender over if your costs are less, even if you do get the funds it won’t be enough leaving everyone involved in a difficult situation.
Do you have a marketing plan? If not this needs to be done before you start asking for an investor to finance your business. How much is the marketing going to cost, is it going to provide a good ROI, are you going to be able to reach your target audience. These are all questions you should have taken into consideration long before your meeting with the bank.
When all is said and done no lender wants to give money to a business they believe is going to fail, work hard to ensure you have a solid support team and necessary skills and expertise to make your business a success. If you know of areas in your business where you are a little thin on the ground, acquire the skill you need or hire someone else who already has it.
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