Funding tips for small business 20

Obtaining funding should start with a solid business plan. If you write a convincing business plan, then your chances of obtaining funding are greatly enhanced. Lenders and investors want to see proof that customers want your product or service and are willing to buy it for a price at which you can make a profit. The more tangible evidence you offer of this claim, the better chance you have.

Other factors that improve your chances to get funded are:

  • Your plan should show good profit potential in a short period of time.
  • The higher the rate of return you can offer investors and the faster you can produce it, the better your chances. Your plan should target a clearly defined market with enough size and purchasing power to produce a profit.
  • Investors also prefer large markets with high growth potential. They avoid businesses that attempt to be “everything to everybody.” Your plan should clearly explain the “competitive edge” your product or service has over rivals.
  • You should show an ability to control both the delivery and the quality of the product or service. Also, that managers and employees have the skills and the experience to make the company a success.
  • Show that you have made a personal investment in this business venture.
  • If you don’t believe in your own venture enough to invest at least some of your own money in it, how can you expect others to? “Sweat equity”—unpaid personal time and hard work—can be important, but lenders and investors like to see an entrepreneur with an important financial stake in the business. It’s a tremendous source of motivation.
  • Lay out a clear, well-conceived, workable strategy for getting this business up and running. Show realistic financial projections covering most likely, pessimistic, and optimistic scenarios.
  • Potential lenders and investors want to be sure that the “dollars and cents” of the deal make sense, and that’s why realistic projections are important. Most entrepreneurs underestimate the amount of money needed for start-up. Don’t get caught short!

About the Author Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry. Follow Tim on Google+ Read more »

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How LivePlan makes your business more successful

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  • Romesh

    I am a student, needing to write out a business plan for an SME as an assignment. I greatly benefitted from these short and sweet tips.

  • chrisda kabunda

    I am a lady aged 23 who would love to start a chicken run business but the problem is how to acquire capital. as a family at my place we rare chickens but i would to have a business of my own where i am making my own profit. If at all i can assisted in any way i will be very grateful.

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  • Kenneth Magasoane

    I have a business that has been in exixtence for 2 years,my problem is how to get money even though I have a good business plan that you guys provided the tools for me to have one.

    I need good finance start up and good finanacial management!

  • Emmanuel matshika

    Hey people i wanna be an intrepreneur so how can i get funding to start my business

  • Dickson Kahindi

    I want to start fruit juice parlour targeting an estimate of like 5,000 people. But my problem is building this B/plan. Pliz assist.

  • Sina

    I have plan to open a small business, I want to start selling ice-cream with trolley at our ancient temples which there are a lot of tourism come to visit. But the problem is I am afraid that it wouldn’t running, so I need some suggestions from anybody who had experience the first open business.

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  • Peter George

    Hello!
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  • David Taylor

    Hi,
    This is my first time at this web site. I was on the SBA site, clicked on the write a business plan link and here I am. I just want to say that this site is very helpfull in the information I am researching and I plan to use the tools here to their fullest capability. Thank you.

  • damien

    hi your site have been very helpful to me in every way i just want to say thank you very much

  • Musekelelwa Mulenga

    This has been truly inspiring to me. I’m looking forward to take on my business now.
    Thank you.

  • Ms. Brown

    The best advice I can give anyone writing a business plan for investment purposes, is to ensure that your spelling and grammar are correct. Remember you are not texting your friends. This is supposed to be a professional document. I would never invest money in a venture if the person doesn’t even have the ability to spell correctly, regardless of first language issues.
    Potential Business Angel

  • Gershom Siame

    Your articles and publications are second to none . You are very inspirational and guiding in the way business is done . The world is learning a lot from you . Big up !!!!!!!!!!

  • http://eatgator.com ivan p

    Restaurant?? Please all who read this take this advice. I have already started my first business and am currenly expanding. Write the business plan!! Use Business plan pro which will make it easy to do so. Get your numbers together because you will need them. If your a restaurant like I am don’t waste your time with banks for financing they won’t even consider it. Look to the SBA for advice but again not for funding if your a restaurant. You will need to get personal loans and make sure you have good credit because credit cards will be your saviour. Good luck!

  • Y-Food Mart/Discount Tobacco

    I have started my own gas station/grocery and I used everything on this website and has made me very, very successful, I now run 3 stations, each one produce a little over 1 million in revenue each year. I am going to be opening another station come december, and the only thing that saved me was having buisness plans and taking all advice from this website. If you want to be very successful I would figure out what kind of buisness you want to run, and then find a local independant owner in which the same market you are trying to get into. Spend some time at their place, get to know the owner and pop the question as of how they have been successful but for peace of mind let them lnow you will be opening away from their establishment or you will get no he’ll p. But me as a 3 station owner I have helped over 6 people start a successful gas station or convi. Store and it has been wonderful. But no one wants MORE competition so please whoever you find to help you locally make sure to tell them you will not be direct competition. Hopefully this helps somof you trying to start small buisnesses

  • Gideon

    Dear Sir/Madam,
    Your web pages on Business plan has assisted me immensely. I was given an assignment on writing a business plan but I have thought of how to write it and my visit to your site has been a great relief to me.

    Thanks for your assistance to the world of learning and your contribution to uplifting knowledge!

  • Arnold

    I am 36 years old guy unemployed and tired of the boredom.I have experience in culinary arts and customer service.I want to open a food truck business.Is there start up capital for such a business in Maine??Is there any food truck biz owners on here that could give me advice?

    Thanks for your time.

  • Vusi

    Iam young guy needing advice on how 2 write a business plan for somthng like a club because i have been given an assignment at the moment

  • hazel

    i want to open up a grinding mill,and so i need to submitt a business plan to get funding,how do i come up with it

  • Gymingash

    i want to start a chicken feeds manufacturing company,how do i write the business plan in order to get a funding from the investors or lenders.am just young in the market, i will appreciate your advice

  • http://www.paloalto.com Chelle Parmele

    That’s great to hear, Romesh.

    We’re happy to supply them for everyone. Please make sure you check out the rest of the articles and also check out our bplans blog for on going tips and information.