Failure is guaranteed if a man does not understand the formula for success and does not apply it correctly. I say this without hesitation and speak from experience in this area. You can be sure that there is a formula for success in all of life’s endeavors and ignorance of the law is no excuse. The fact that some of us are wise in areas of our success and foolish in other areas where we experience failure shows that we all have something to offer each other. The same principle applies when it comes to raising funds to insure. If you don’t know what the secrets to successful financing are, you will need to hire an expert to help you learn and master the techniques to gain well-founded knowledge for future success. One thing is for certain, you don’t want to become like the masses who are unconsciously incompetent on this issue, who often run to banks and investors with ill-prepared business plans only to face failure. In this article, I am now going to provide you with insight into the world of writing an effective fund raising business plan that will help you successfully fundraise and get it done very quickly. The key to successful financing is that your business must be “investment ready.” Unless you have green traffic lights in all of these areas that I will cover soon in this article, you will run into numerous challenges and will not be able to raise funds.
The secret to successfully raising funds for business growth was revealed to me while working for many years with financial institutions that grant funds to companies, in my role as Financial Advisor and Appraisal Manager, dedicating 50% of my time to review and analyze business plans for financing. and the remaining 50% manage customer relationships after financing to ensure they comply with financial covenants. I can honestly tell you that a lot of the companies that consistently raised funds were using the same tried and tested systems. Those who were challenged frequently used a multitude of different systems and barely understood why they were unsuccessful, often using petty statements to back up their ignorance. You are cautioned not to fall into the category of the last group, and by reading this article you will put yourself one step ahead of the rest.
Here are the top five reasons why a business plan financing will be declined:
1. The marketing strategy shows that the company lacks a competitive advantage in its industry or that the company lacks a strong marketing strategy and is likely to fail.
2. The management team is inadequate and, in some cases, lacks the skills necessary for business success.
3. The business strategy is unclear with the risk of exposing the funder’s capital to losses.
4. Financial projections are based on fairly optimistic assumptions, which when stress tested show that the company will fail if the most likely market outcomes materialize.
Unless your business has a plan to address all of the above issues, if they arise in your business, you are guaranteed to fail in your fundraising effort. The reason is simple; The business plan is a management tool that funders use to carry out their due diligence on businesses that need their cash. Funders have a variety of tools that they use to assess a company’s viability for funding, and sadly, many small businesses are clueless about these evaluation techniques for funding decisions. This means that many companies are not ready to invest when they approach a funder and are surprised that their time and money has been wasted in the production of the business plan. Unless small businesses understand how they are evaluated for financing, the risk that businesses will not be able to obtain financing for growth, even with the proliferation of government-backed loans, will continue to increase.
In conclusion, before you, as a business owner or manager, approach lenders or investors for financing, it is recommended that you make sure that you take the points that I have shared in this article with you very seriously. If you are having trouble with the technical details of business planning, seek professional help from experts, as you are more likely to get the financing you need with the right business support solution than trying to go it alone and face rejection.
I wish you great success on your business finance journey and continue to read my articles on this subject area and management issues in general.