Indeed, success is not a certainty, but we have to take risks anyway. One of the major risks taken by most entrepreneurs comes in the form of business financing.
As a business owner, your chances of getting the money you need depends on you and you alone, which implies that you have to choose your financing options wisely. If you are able to avoid missteps while seeking funding for your business, the chances are that you will be able to secure the perfect funding. However, how many entrepreneurs can identify these missteps? Even those that do, sometimes, don’t know the right way to go about it. And one of the most common missteps is the fear of the unknown. Fear of what might be if you don’t succeed, fear of what your lenders might do if you don’t pay back as agreed, fear of whether or not you will be able to find the right debt help UK if the need ever arises. However, while some of these worries aren’t unfounded, one only needs to get creative when it comes to dealing with them. For instance, finding an IVA is a good way to go when you’ve obtained your business financing through a lender. IVAs are designed to help individuals and business owners handle their debt when they can no longer meet the prevailing demands of their financial obligations. If ever, push comes to shove and you are unable to meet the agreement you have with your lender, the next step should be finding the best IVA Company around you. With that being said, I hope every aspiring and established entrepreneur would find this article helpful while looking for the right funding for their business.
Not having a business plan
Think about this; who would lend an entrepreneur a substantial amount of money when he/she doesn’t have a credible business plan? Banks and equity investors will, no doubt, ask to see your business plan before granting you the financial assistance you seek. Not only will a credible business plan communicate your long-term goals, but it will also convince potential lenders that your business is worth investing in. A good business plan should contain how you intend to beat off competitors, revenue projections, and why you think your business would succeed in the market you are going into.
Underestimating how much you need
If lenders, banks, or investors realize that you’ve miscalculated the amount you need to grow, they will not fund you. After all, nobody would want to invest in a business owner who isn’t even sure of the amount of capital he needs. Remember that there would be fees and charges associated with loans and equity investments. Be sure to add them to the amount you request from a potential sponsor.
Not researching potential funders
One of the greatest mistakes any business owner seeking business financing could make is not researching a potential funder before approaching them. Even if you are able to secure funds from them, there is no telling what the terms and conditions could turn out to be. But if you’ve done your research well, you won’t be caught off-guard. Some banks require no collateral, while some do; some lenders use a debt recovery agency like the Moorcroft debt recovery limited, while others simply deal with you directly; some lenders can be negotiated with through IVA, while others don’t give you too much room for renegotiation. By and large, be sure to research extensively about any funder you are approaching.
Not finding the right information
With the wealth of business financing options available in the world today, it is easy to become overwhelmed and confused. As an entrepreneur, it is expected of you to seek out good information and advice before making your decisions. If you don’t really have the right people around you, be sure to hire a financial advisor. The reason for this is to ensure you are well-equipped with the right knowledge you need before and after obtaining a business funding.
Taking on too much personal debt
Many new entrepreneurs start out by financing their business via personal credit cards, home equity loans, or second mortgages. Others get loans from friends and family. These are sometimes good methods for new business owners to establish a track record to show to potential funders eventually. However, piling up personal debt may harm your credit score, something lenders look at when reviewing a loan application. And you should know your credit score before approaching lenders or investors.
Taking the wrong kind of financing
If you seek control over decision-making for your business, equity investment isn’t ideal for you. Equity investors will demand a percentage in your business and they will want to participate in the decision-making process. If you can’t live with that, debt is a better choice; lenders leave the business operations to you. But before you approach any lender, be sure to ask yourself this: how do I get my debts written off in case of any financial difficulty in the future?
