Rob Straathof, CEO at Liberis
Growth is a priority for many businesses, however finding and securing the right financing may seem like a minefield in the current climate. To help, Rob Straathof, CEO at alternative finance provider Liberis, has put together the following tips on what you should do to support you in securing your business’ investment...
While there are a number of financing options available to small businesses, including bank loans and short-term funding solutions such as a business cash advance, the path to actually securing investment is not always straightforward. In fact, our very own research has revealed that over 60% of UK SMEs said they require funding to grow, but 57% of these were unsure how to obtain it!
Whether you’re a seasoned entrepreneur or a first-timer, actually bagging this cash is not for the faint hearted. Here are three top tips to consider when making your applications:
Strengthen Your Position
To maximise your chances of securing funding, it’s important to be realistic about your business’ position and your existing cashflow before you start looking, 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 the right provider.
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 funds. 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 may 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.
Rob Straathof is CEO at Liberis, the alternative finance provider.
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