Do Your Groundwork Before Looking For Finance

Here is another BizTip for entrepreneurs who want to take their future into their own hands by expanding their businesses or by starting out a new venture:  “Do Your Groundwork Before Looking For Finance”.

Christoff Oosthuysen is the resident business coach on Randall Abrahams’ weekly radio show, Point of View. Here is another of the weekly BizTips…

Many entrepreneurs looking for business finance make the mistake of rushing into compiling a business plan, which ends up taking many weeks to complete, and then they start approaching banks and other business financing institutions with lots of hope, but little chance to succeed.

This is not the most productive way to go about securing funds for your start-up or for funding your expansion plans! To succeed, you need to first focus on the groundwork, and only after completing the first steps, you may take your proposal to carefully selected prospective funders.

Today I can offer you the five most important steps to take in preparing for business finance. It’s a hand full, and easy to remember:

1. Clean Your Credit Record

• Check if you are blacklisted, and if you are, take the necessary steps to have you removed from all black-lists.
• Track any dishonoured payments in your past and make arrangements for settlement.
• If you have any judgements against you, enter a partnership with some-one with a clean record to take initial ownership of the business.

2. Substantiate Your Own Contributions

• Gather all the cash you can and keep it separate so that you can offer it as an “own contribution” when the funder asks for this.
• List all the resources you contribute, such as vehicles, equipment and your time.
• List your assets which the funder will accept as security and put a value to each item, or if you do not have much assets, then find some-one who can provide security on your behalf.

3. Carefully Select Prospective Funders

• Identify the banks, financing institutions or other funders who are providing financing to businesses like yours; and prioritise the list with your first choice at the top.
• List all their criteria for each prospective funder, and make sure you meet all of the criteria.
• For each prospective funder, determine the cost of getting financing so that you can compare your options.

4. Make A Memorable Impression

• Find out who the right person is to meet at each of the top three on your list; then set up a face-to-face meeting.
• Be prepared for the first meeting: know each little detail of your business idea; know their funding criteria and conditions; and take along copies of all your business registration and personal identification documents.
• Show up at the meeting as their “perfect client” – dress as they’ll expect a perfect client to dress, speak like a perfect client would, and show them that you are indeed their perfect client.

5. Work Their Process Meticulously

• Produce a “perfect” business plan based on their criteria; and if they have a prescribed template, follow their format closely, answering all the questions they may have.
• Follow the prescribed process in submitting your business plan, including the format and way of delivering it to them.
• Confirm with them how you should follow up and stay in contact with them; and when they ask for more information, reply as quickly as possible.

Throughout you must just keep impressing them by showing you are on top of your game!

I can also offer you a bonus tip here, which should really puts your plan to fund your business in perspective…

The 6^th step is:
Seriously Consider Other Funding Sources

• Negotiate good terms with your suppliers so that you reduce your business financing needs – in this way you may even find that you do not need financing at all!
• Ask your family and friends to all chip in a little. This might not be enough to cover all your needs, but it does add up to making your own contribution much bigger, which will help a lot when you submit your proposal.
• And lastly, look for an “angel investor” – there are some people around with money, who will support talented entrepreneurs to succeed.

Remember, the success of your business depends on YOU.

Do the groundwork before you look for business finance to make sure you have the resources needed to make your business a huge success. Check your credit record, list your own contributions, target the most suitable funders, make an impression, follow their process, and consider other sources of funding your business.

You can take your own future in your hands!