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 I speak from experience in this area. He can rest assured 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 fundraising. If you don’t know the secrets to successful fundraising, you’ll need an expert to help you learn and master the techniques to gain grounded knowledge for future success. One thing is certain, you do not want to become like the masses who are unconsciously incompetent on this subject, often going to banks and investors with poorly prepared business plans only to face failure. In this article, I will now provide you with an insight into the world of writing an effective business plan for funding to help you raise funds successfully and do it very quickly. The key to successful fundraising is that your company must be ‘ready to invest’. Unless you have green lights in all of these areas that I will soon cover in this article, you will be faced with numerous challenges and unable to fundraise.
The secret to successful fundraising for business growth was revealed to me while working for many years with financial institutions that fund companies, in my role as a Financial Advisor and Evaluation Manager, spending 50% of my time reviewing and analyzing business plans to obtain financing. and the remaining 50% manages post-financing client relationships to ensure they comply with financing covenants. I can honestly tell you that many of the companies that were constantly raising funds, used the same tried and tested systems. Those who were challenged often used a multitude of different systems and barely understood why they weren’t succeeding, often using meaningless claims to support their ignorance. You are warned not to fall into the category of the latter group and by reading this article you will put yourself one step ahead of the rest.
Here are the top five reasons a business plan will be turned down for funding:
1. The marketing strategy shows that the company lacks a competitive advantage in its industry or the company lacks a strong marketing strategy and is likely to fail.
2. The management team is inadequate and in some cases lacks the necessary skills for business success.
3. The commercial strategy is not clear with the risk of exposing the financier’s capital to losses.
4. Financial projections are based on fairly optimistic assumptions, which when stress tested show that the business 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 efforts. The reason is simple; The business plan is a management tool that funders use to conduct their due diligence on businesses that need their hard-earned money. Sponsors have a variety of tools they use to assess a business’s viability for financing, and unfortunately, many small businesses are unaware of these evaluation techniques for financing decisions. This means that many companies are not ready for the investment when they approach a funder and are surprised that their time and money was wasted in producing the business plan. Unless small businesses understand how they are screened for funding, the risk that businesses will not be able to raise funds for growth, even with the proliferation of government-backed loans, will continue to rise.
In conclusion, before you as a business owner or manager approach lenders or investors for financing, you are advised to make sure you take the points I have shared with you in this article very seriously. If you’re having trouble with the technical details of business planning, seek professional help from experts, as you’re more likely to get the funding you need with the right business support solution than trying to go it alone and running into problems. rejections
I wish you much success in your business financing process and keep reading my articles on this topic and on management issues in general.