Getting external funding for your business is one of the best ways to get ahead quickly, and start profiting from your efforts. However, accessing business funding might be complicated and confusing if you don’t know where to start.
How to Get Funding for Your Business
There are a number of options available for businesses to secure funding. Businesses in Cambodia seeking funding can use this article to guide them through the process of securing funding so that they can start growing their businesses.
What is Business Funding?
Business funding is an essential part of getting your business up and running, or expanding your operations. You may need external funding for any of the following reasons:
- Help cover business expenses when the business experiences cash flow interruptions.
- When executing large-scale projects.
- When restocking inventory.
- Managing seasonal spikes in demand.
- Expanding the business product lines or breaking into new markets.
If you are hesitant about accessing business capital funding, remember that even larger organizations seek funding regularly. Business capital funding is far more common than you might think. However, before accepting a business loan, it’s essential to look at different types of funding and determine the best option for your business.
Equity business funding involves selling shares in your business in exchange for funding. Equity funding typically comes from an investment firm.
Once you have an equity investor on board, they share ownership with you for your company. Before seeking equity funding, remember that you will lose some autonomy over your business and might have to adjust your company strategy.
Debt business funding is another option to raise business capital. Debt funding allows business owners to access funds for their company while keeping total control and ownership, unlike equity funding. Debt business funding is a type of loan.
If you are accepted for debt funding, a creditor will lend money to you that you will repay with interest. Creditors in debt business funding do not have ownership claims over your business, making debt funding an attractive option to many business owners.
Types of Business Funding
Not all business funding options are built the same. Knowing the following types of business funding available can help you make the right decision and help your company thrive.
Grants are sometimes difficult to receive but can significantly help startup businesses that qualify. While grants aren’t the most likely option, applying for a grant might be worth your while. Small business grants are perfect for businesses able to receive approval because they don’t have to be paid back at all.
Angel investors are another way for business owners to get capital funding. An angel is a wealthy investor who invests in your business with the expectation of making a profit. These investors are often skilled and experienced in business and can give you expert advice on growing your brand.
Angel investors typically invest in the earlier stages of your business. They receive a position on your board of directors and can supervise management as they wish.
Small Business Loans
Small business loans come in many shapes and sizes that would suit your business and help you get started doing what you love. Small business loans are repaid over a specific period, and the size of your loan might vary. Below are some options for small business loans to consider.
- Term loans
- Business lines of credit
- Invoice financing
- Personal loans
- Business credit card
Bank loans are usually widely available for small businesses seeking funding. Getting approved for a bank loan can be time-consuming compared to other options and might require collateral to guarantee that you will be able to repay your debt.
Make sure you are familiar with your bank’s policies and advantages before applying for a loan. Any hidden terms or fees could cause more harm than good to your company.
A more modern way to fund your business is through online crowdfunding. Crowdfunding websites are increasingly popular and can help your small business raise enough money to launch products or expand operations.
If you choose to crowdfund, remember that this option is usually time-consuming. You will have to make content with your product to show online and get people interested. Remember that some crowdfunding sites only allow you to withdraw money once you meet your fundraising goal.
How to Secure Business Funding
Once you know your company’s best type of business capital funding, it’s time to take action. Find the best way to secure business funding and make your dreams a reality. A comprehensive plan can help you secure business funding and finance essential parts of your business. Following the steps below will help get you started.
Have a Plan
Securing funding is impossible if you don’t know the proper steps. Start your journey by creating a definitive plan to guide you through securing business funding. Lenders want to know how you will pay them back. When you’re making your plan, think long-term.
Additionally, lenders will ask about different parts of your plan. Be prepared for questions about why you need funding, your product, market size, market research, your complete business model, and forecasts of company finances.
Do Your Research
Always conduct thorough research before pitching your case for why your business deserves funding. Know everything you need about your market and niche to show investors you know what you’re talking about. Understand why your product or service is essential and why it will be successful.
Remember to research lenders before pitching your company. Always know what a lender is looking for and if your company is a good match.
Present a Compelling Case
Pitching your business is a big moment, and your case should reflect how vital funding is to you and your passions. Show investors who you are and how funding will help you and others who purchase your product or service.
Suppose investors hear the exact same pitch from two people, one passionate and the other stone-faced. In that case, they’re far more likely to go with the former.
Have a Backup Plan
Things won’t always work out when you’re seeking small business funding. If your first option doesn’t work as you hoped, turn to your backup plan. A backup plan can help keep you motivated and focused on what matters most for your business in case other options don’t lead to anything.
Be Prepared to Negotiate
Negotiation skills are everything when you’re trying to secure business funding. Before you pitch your company to lenders, be ready to negotiate. If you’re asking for a significant loan, be prepared to negotiate until you and the lender reach a mutual agreement. Negotiating will show lenders that you are passionate about your business but conscious of and thankful for their contribution.
Business funding is essential for many businesses, big or small. The right funding option can help you get your business off the ground. Economic prosperity is within your reach, if you make clever business decisions. Proudly Cambodian is dedicated to helping owners in the Cambodian business sector connect with international markets and achieve economic prosperity.