Gaining funding for a small business takes a strategic approach, so it's time to get organised.
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Growth is a priority for many businesses, however finding and securing the right financing may seem like a minefield in the current climate. Research from alternative finance provider Liberis revealed that over 60% of UK SMEs said they require funding to grow, but 57% of these were unsure how to obtain that all important finance.
While there are a number of financing options available, including bank loans and short-term funding solutions such as a business cash advance, the path to actually securing investment is not always straightforward. And whether you’re a seasoned entrepreneur or a first-timer, actually bagging this cash is not for the feint-hearted.
Finding the right source, doing your research, pitching and negotiating doesn’t happen at the click of your fingers, but one of the most important things to do is to persevere – and to prepare!
The following tips explain what you should do to support you in securing your business’ investment.
Strengthen Your Position
Before you’re ready to reach out and source funding, it’s important to be realistic about your business’ position and your existing cashflow - and a key way to keep on top of this is to maintain a strong focus on your business’ budget.
Small businesses are highly dynamic, so make sure to constantly revisit your budget and refresh it regularly so you can ensure you’re working from accurate figures.
Be authentic, be clear and before you reach out to source funding make sure you have all the relevant credentials in place. Take stock of your current income, your expenses, overheads and record it all in a profit and loss statement, for example.
When it comes to looking at the money you don’t yet have, the same thought should apply! So whether it’s securing investment to start a new business, a planned expense such as a refurbishment or even having to fix an unexpected issue, thoroughly scoping your need for funding and the required cost will play an important part in defining a provider.
One way to further strengthen your position is to get noticed – for the right reasons, of course. This can be key, particularly if you are seeking funding from an investor as often they will only be looking to support the most innovative businesses.
Building a positive, supportive network of referrals can be a great way to get yourself seen and to pick up useful tips and recommendations too. So, make the most of small business events and networking opportunities, they’re everywhere! Just grab your business cards, questions and warm introductions to get started.
It’s also worth taking stock of LinkedIn and other social media channels, such as Twitter or Facebook, to further build your network and establish your brand. Research similar companies online and find out what they’re talking about, who they’re engaging with and what events they might be attending.
It’s important to be selective when attending events, so use your time wisely. You shouldn’t necessarily go to every event you’re invited to. Do your research, look who attended last year, who’s clicked attending online so you can strategically look to build your network.
Get involved with your business community, whether it be local or industry based, and learn from your fellow entrepreneurs. Because shared knowledge really is key! It’s highly unlikely that you’ll be the first business in your network looking to secure additional funding and many others will have been in your position before.
Ask for as much advice as possible and learn from others’ experience: which providers worked for them and which didn’t; what key questions should you be asking your suppliers; and who caters best for your business type. This insight will be incredibly valuable when reaching out for funding.
Your Credit Score
When applying for business finance, funding providers will use a credit bureau to look at your credit files and your credit score. These numbers are indicators of how likely a business is to fulfil its financial commitments, so keeping them healthy can be vital to business owners in need of investment.
Be aware of factors that can affect your credit score such as your track record for making payments (referred to as your credit history); any previous funding applications; and any financial connections you have to other people, such as a business partner.
As well as this, it’s worth having an understanding of what you can do to improve your credit score too. For instance, cancelling unused credit cards and keeping a close eye on both your personal and business credit files.
Maintain your credit score well both in the short term and long, and you are sure to boost your chances of being accepted for additional business finance.
Closing the Deal
Whether sourcing a bank loan, crowdfunding or investment from an angel, closing the deal is one of the trickiest, and most sensitive elements of acquiring funding. You have to be prepared to make a pitch, and a confident, failsafe pitch at that. Write a script, rehearse and have answers to any difficult questions that my come your way.
Be authentic, genuine and compelling – harnessing all the passion you have for starting your business in the first place! Funding providers will want to understand not only the position of your business and how you plan to use the money, but what your key challenges and current opportunities are too.
When it comes to small business finance, there is no “one size fits all” solution. But we hope that these tips will provide you with a little guidance on how to reach your business’ full potential when making applications and building towards your goals. Remember to consider your business needs and research your options, and success is sure to follow.
 Liberis Q1 Research, February 2018
 Liberis, 2018
Rob Straathof is CEO at Liberis, the leading alternative finance provider, offering a way to finance UK small businesses.