Looking for funding to start or grow your start-up business?
As a Start-up, a business with less than two years of operation, you face unique funding challenges. The good news is that there is a community of resources available to help [Thank you Sparkyard]!
Knowledge is power. By increasing your understanding about how to prepare for accessing capital that power is yours.
I like to think of preparation in terms of those little, stackable children’s toys: Legos. When new entrepreneurs talk about the ideas they have for a business, those ideas are often scattered, like a box of spilled Legos. The little colorful pieces, scattered all over the floor, have tons of potential to become creative structures – but only if they are stacked correctly.
Are you ready to stack the Legos?
Slow down, listen, and take advice.
Your business advisor or loan officer has more experience than you do in planning for funding for your venture. It is their job to know how to prepare your information for the application and to tap into the right resources for your needs. Listen to what they tell you. If they ask for specific information, do not be cagey. It is OK to say “I don’t know what that means.” or “Where do I find that information?” The more open you are to listening to your resources, the faster and easier the lending process will be. People in these roles are there to help you; however, remember that they do not know your level of knowledge about the lending process. It is your job to ask for clarification when you need it. If you find yourself overwhelmed by something that has been requested: Tell someone. Learning is a major part of being an entrepreneur. Get comfortable asking questions and seeking advice from those around you.
Insider tip: Mentorship and learning are the golden ticket to entrepreneurial success.
Know your numbers.
What is the amount of money that your business needs to execute your plans? If you cannot answer this question very specifically, you will need to slow down and take a weekend or so to build some financial projections for your business. The reason this is such an important question is that if you really need $50,000 and you only ask for $25,000, you will struggle to be successful. It is important to understand that your funders want you to succeed. Requesting less than your project’s true need or not having a clear understanding of your asking amount can indicate to a funder that you are not prepared. A common misconception is that asking for less will make your business appear dollar-conscious and responsible, when in fact it can do the exact opposite. If you do not know how to build projections, that is OK. Again, mentorship and learning are the golden ticket to entrepreneurial success. If you need advice, there are many community resources (Sparkyard) that can help.
Have a plan.
Winging it when placing an order at a restaurant is fine, but winging it when starting a business is not the path to success. If you are thinking that writing a business plan will slow you down or limit your ability to adjust as you grow – you might want to think again. As a fellow entrepreneur, I also fought the idea of a traditional business plan, thinking that my time would be better-spent doing and creating. I was incorrect. Had I slowed down and done more research before jumping into action, I could have saved myself and my business from some pretty intense roadblocks. I now realize that those same roadblocks would have been completely obvious and avoidable had I taken a moment to pause and better prepare. Entrepreneurs are tough, innovative and resilient people, but why work harder when we can work smarter?
At the chance of becoming repetitive: mentorship and learning are the golden ticket to entrepreneurial success. Understanding business planning becomes easier with the right information and resources. Knowing that the objective for running a business is revenue streams and profit building, you will need to build a business model that is designed to have a strong path to sustainable revenue to build profit.
There will be lists of documents required, be ready to dive in and keep them together. The more organized you are, the faster the process will go. This is your opportunity to start developing a system for document storage that will remain important as long as you run a business. From this moment forward, you are a personal representation of your business. Each interaction communicates to someone what doing business with you looks like. Remember to keep in mind the reputation and image you are creating for the person you are working with. Are you presenting someone that others would look forward to doing business with? Every connection is an opportunity to grow as a business owner. This starts with the funding process. Your advisors and loan officers can be amazing resources for connections and community involvement – it is important to treat these relationships professionally. Staying organized and communicating clearly are two very straightforward ways to grow and maintain these professional relationships.
Not funded yet? Do not quit your job.
As a start up, you will need to be the personal guarantor for your business loans. All lending, regardless of type, requires that you be able to repay the money you are borrowing. If you do not have a strong and consistent stream of business revenue in place, you will need to prove that you can repay the borrowed money. Remember, planning is crucial.
Are you ready to start building beautiful things? By better understanding the landscape of accessing capital, you are gaining the knowledge to empower your business to be successful.
Do not forget that insider tip: Mentorship and learning are the golden ticket to entrepreneurial success.
Are you ready to apply for funding? PeopleFund Loan Application
Need a little help preparing? PeopleFund Intake Form
About the Author
Holly Burrow helps educate clients and create partnerships across North Texas. With a passion for entrepreneurship and small business, Holly’s career has led her to building and growing other people’s small businesses, founding her own businesses, and consulting with new owners to establish and grow their own start-ups. At PeopleFund we believe that healthy small business growth is the key to economic recovery and development and that every person, no matter their background or economic situation, has the ability to become a successful entrepreneur and job creator given access to resources they need. Our goal is to give people the opportunity to turn their talents into a sustainable livelihood and achieve ﬁnancial stability for themselves and their families.