In business one of the most important factors for success is ideas. Having that bright spark that will corner the market and offer something nobody else can is a great feeling – but even with the most original idea in the world, it can be difficult to get hold of the capital you need either because of a lack of current assets to secure loans against, an inability to save the amount needed or simply a hesitant lending market.
Do your research, concrete your business plan
Anybody who has seen Dragon’s Den or Shark Tank will know that entrepreneurs who don’t do their research properly are usually grilled about it, and very rarely get that precious investment money that they need. An idea with holes in it signals to investors that the rest of the business journey could well be a bumpy one, and if the plan isn’t right to begin with, then the business is unlikely to be successful in the long-run. Every inevitability needs to be planned for, and a good business plan will answer any doubts that investors will have without them even needing to speak to you. It should also serve as a point of reference for you as a practical document, and something you can always come back to as the business gets up and running.
Ask what your country can do for you…
As if we needed reminding, the economies of the US, the UK and most of Europe aren’t exactly what they were, and the governments of these respective countries know this only too well. Whilst on the one hand it means that many government services are being scaled back and cut, it also means that authorities are keen to promote the growth in business that can help pick up the economy, particularly given that banks are now more apprehensive than ever to lend to small and medium-sized businesses, never mind start-ups.
What this has led to in many territories is the decision to make funds available for promising start-ups, and this has manifested itself in many different ways. It takes the form of low-interest loan arrangements, grants and subsidies, and in most cases professional guidance and business counselling, so the best approach is to go the authorities in your area and see how they can help.
Turning to the bank
For many small businesses and start-ups, going to the bank for a loan is now seen as a last resort. Again there are many reasons for that, including a lack of anything to secure the loan against, low lending rates and high interest.
What you need to show banks (as well as potential investors), is that this will be a worthwhile venture for them. It’s easy to forget sometimes that the bank has a stake in the success of the business and is effectively a partner of sorts, as opposed to just offering a service that you deserve to be given (although it could be argued that their reluctance to lend is a direct result of mistakes made in the financial sector before 2008). If you get knocked back, ask why, and if there’s something you can do about it (for instance by re-doing the business plan or getting hold of some of the initial capital yourself.
Daniel N is a UK blogger who writes on a wide variety of topics including business and marketing, He is currently writing on behalf of Rajapack, a UK-based packaging company.