Seeking funding in a recession can be tough. It is time to get back to business funding basics. There are four key areas to concentrate on when applying for funding. If you work on fortifying these areas and highlight them well in your funding documentation, your chances of obtaining business finance is significantly improved.
#1- Strong Business Track Record
Showing how you have run a successful business in the past or had an influential hand in running a successful business is critically important. Document what your accumulated track record in business entails, and how it makes you a sound investment or loaning risk. Show what you have learned and what has made you a better business person.
#2- Business Experience
Detail how you have specific experience for the type of business, customer and market. It is experience that lenders want to see, specially in a recession. Find ways to strengthen your team if you lack sufficient business experience for the funding you require. Business experience is what funders rely on to determine if you are capable of running a successful company and repaying the funding.
#3- Strong and Profitable Niche Markets
A business funder will want to see precisely what is the strength and potential of your markets. If you have clearly defined market niches, it is much easier to convince a funder that your business has great potential. Then show how this potential will translate into company profits in your business plan and funding overview. Break down your market into niches and segments, showing clearly how you will best serve them. Your ability to identify and explain why a particular niche will be a great target for your company gives funders optimism that you can operate at a profit and provide payback and payoff.
#4- Good Cash Flow
A Cash Flowing business is a much easier sell to a funder. Having realistic Cash Flow projections will be a much easier sell as well. Clearly explicate your assumptions in making the projections in your Business Plan. Servicing a loan or repaying an investment comes down to your ability to cash flow as a company. Spend time in this area.
Keep It Simple
The KISS acronym applies. Keep it Simple. Apply the aforementioned key areas to your business and your funding search will sure enough improve. Make sure you have solid Business Planning to present to funders. Good luck!
Resource: For more information on planning for successful business funding, please see my article on Finance for Business.
About the Author: Frank Goley is a Business Consultant for ABC Business Consulting.
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