Financing the Dream
FINDING FUNDING THAT SUPPORTS BUSINESS GROWTH
Funding is critical to launching and growing a business. Thoughtful preparation of your funding needs can contribute immensely to the success of your business. Be prepared and armed with the financial information about your business before going to a funder of any type.
At the Growth Center, we offer programs and classes that will help you with your funding needs.
To get you started, below are questions to ask yourself before you look for funding.
For pre-startup and startup businesses:
- Know what your business is, its revenue potential, costs, margins and competitors, all for the first two to three years. Even if you don’t know, make a guess and put the information into a spreadsheet. Estimate projected income or include actual salaries, benefits, administrative costs, rent, insurance, equipment and other often overlooked expenses.
- Try to generate sales before you request funding to demonstrate your capacity to earn income and thus repay debt. Develop a 30-second elevator pitch as well as a three-minute pitch. Practice them a lot. This will help you to easily talk about what you do in networking situations.
- Work with counselors, such as those who offer programming through the Growth Center on the best way to fund your business – through debt or equity.
- Consider Small Business Administration-guaranteed loans, and go to lenders that know your industry.
- Grants are a good source of funds but are not sufficient to grow a business and should be used for non-critical product or process innovations, also known as “disruptive innovations.”
For Growth/second-stage and Established businesses:
- Make sure you’ve got the financial instruments (cash flow, balance sheet) in good working form. If you’re not managing your business by the numbers you’re hurting your business and your chances of getting funding.
- Be clear about what your needs and objectives are. It’s very difficult to get funding for operating expenses. There’s more opportunity for business expansion (new products, new markets, new hires, new partners) but your history and projections will need to support your request.
- A line of credit may be more appropriate than a straight loan. Consider your needs and the terms.
- Talk with your accountant; this is critical.
- If you’re a technology company, consider Small Business Innovation Research grants from the federal government. They are terrific for new product concepts but have a long lead time and can be complicated, so your core business should not be dependent on them.
- Ask yourself, would you lend to yourself?
Want to learn more? Contact us for help with your funding questions and concerns.