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Small Business Funding: The Five Golden Rules for Startups (Posted by Innovate UK)

Wed, 09 March 2016

It can often feel like securing the required funding for your new business startup is something that is just never going to happen.
But while it may be one of the most fundamentally important elements in getting your business up and running, getting hold of the necessary funds need not be a nightmarish challenge.
 
In truth, it often turns out that those who ‘fail’ to secure the capital they needed simply gave up too soon. So in the interests of those looking to enter the small business startup world in the near future, here are the five golden rules to follow to the letter when it comes to securing funding:
 
Rule 1: Explore Your Options
First of all, to give up before exploring literally every option available to you is to quit prematurely. Even if you have explored a variety of available options and so far met with no success whatsoever, this doesn’t necessarily mean that the next avenue you explore won’t be the one that pays off. From personal loans to sponsorship to home equity release to grants to crowd funding to venture capital and so many more, chances are you haven’t even come close to exploring all options. If unsure as to where to turn next, speak to the experts – there’s always another option to try.
 
Rule 2: Work Out How Much You Need
The key in this instance is to focus your efforts around the word ‘need’ – as in to work out exactly how much you need and not how much you want. The reason being that while you may wish to pull together quite a lot more than you need as something as a safety net, asking for more than is necessary will always present you as a less appealing prospect to investors. But at the same time, you of course don’t want to end up with too little capital behind you, which could for obvious reasons result in disaster.
 
Rule 3: Expect Delays
This is absolutely a process that cannot be rushed and one that is almost guaranteed to take longer than you expect, even if things go to plan. The simple fact of the matter is that investors aren’t generally in the habit of throwing around sizable sums of cash, without first giving themselves plenty of time to carefully consider it. Not only this, but it is also common to be given the impression by one given investor that they are absolutely interested in what you are doing, only for them to then change their minds entirely a few weeks or months later.  But still, giving up is no solution.
 
Rule 4: Get Your Numbers Ready
Given the fact that you are pitching yourself to potential financers for financing your business needs, it doesn’t take a genius to figure out that financial information is what they are interested in. Promise them all the returns and give them all the assurances in the world, but if you do not present figures that clearly show how their money will be used and what can be expected in return, it’s game over.
 
Rule 5: A Thorough Business Plan
Last but not least, you also need to make sure that you have a comprehensive yet concise business plan to present to them, essentially taking them through each step of the process from your current idea to your long-term success. Once again, it’s all well and good for you to tell them how great you are and what you intend to do with your business, but it’s something else entirely to present it in the form of a spectacularly professional business plan.
 
About Innovate UK
Innovate UK is the UK's innovation agency. They work with people, companies and partner organisations to find and drive the science and technology innovations that will grow the UK economy. It is an executive non-departmental public body, sponsored by the Department for Business, Innovation & Skills. 
You can subscribe to the Innovate UK YouTube channel here, or you can also follow them on Twitter at @innovateuk
 

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