Luckily, there are all kinds of people out there ready to financially support your idea if you approach them properly. Small business grants, venture capital and startup accelerators are among the many options you can pitch to for potential funding – but we’ll get to that in another post.
Before you do any of that, you need to have a plan. There are certain things you need to sort out before anyone will be willing to give you money. This list covers the core things you need to do before applying for funding.
Some of these things will take longer than others. Be realistic about setting goals and prioritizing time to make these things happen on a timeline that works for you. Depending on where you’re at, you might find yourself spending weeks on these items, especially if you don’t have a business plan yet. Take your time to accomplish these items properly so you can approach funding opportunities with success.
1. Develop a business plan
Above anything else, the first thing you need is a business plan. This document is the guiding light that steers your idea into an actually financially viable business. It’ll also represent your business when applying for funding. Whether looking at grants or loans, funders will want to see the business plan.
The plan should give a clear look at the business opportunity, how it’ll happen and its feasibility. The plan should reassure readers your business is well-researched and likely to succeed.
There is a multitude of template options available to help get you started on a business plan. Depending on the nature of your business and current capacity, it can be a simple, concise five-page document, or hundreds of pages of details.
At a minimum, your business plan should address to some extent:
- Your mission statement and goals
- An overview of your industry
- A market/competitor analysis (including a review of your business’s strengths and weaknesses)
- Your operating plan (details on how you’ll make it happen)
- Your marketing plan (details on how you’ll promote it)
- Your financial plan (details on how you’ll pay for it)
Make sure to use clear language, focus on actionable objectives and provide data, research, and sources to back your ideas where possible. The research and information you put into your business plan will also make applying to future funding proposals a lot more efficient.
2. Figure out your strengths and weaknesses as an entrepreneur
When developing your business plan, you’ll assess your business’s strengths and weaknesses. You should do the same for yourself. An entrepreneur wears many hats, but it’s still critical to know what your actual strengths and shortcomings are, for instance:
- Are you a good writer? Or is it something you struggle with?
- Are you meticulous about attention to detail or are you a bigger picture thinker?
- Are you a natural salesperson or does that take a lot of effort for you?
Identify what you do best and the gaps where you’re not as strong. Down the line, you’ll want to fill those gaps by hiring people with these specific skill sets. That should be a factor for your funding and future growth goals.
3. Create honest financial projections for the first 2-3 years of your business
Before you pursue funding opportunities, you need to know how much you’ll be asking for, where it’ll go, and what it will return.
Be realistic about when you’ll need the funding and how much you’ll need to effectively deliver your business objectives for at least the first 2-3 years. You’ll want to map out information including required expenses, potential expenses and estimated revenues. There are countless online resources to help you estimate financial projections.
These projections will be important when applying for funding. It’ll demonstrate to funders you have a reliable plan and the ability to return on their investment or loans. It’ll also ensure you’ve planned out enough cash flow to keep your business running.
4. Ensure your personal finances are in order
While assessing your financial projections, you need to consider your personal history. As the head of the company, bankers and funding organizations will also evaluate your finances. They’ll take that into consideration when it comes to whether or not they’ll give you funding or financing. Be proactive about checking your history including:
- Identify your personal investment and collateral (assets)
- Check your credit history
You’ll want to make sure everything is in order to demonstrate credibility as the face of your business.
If there is anything you’re worried about, be proactive about working with a financial professional to get it sorted or working towards improvement. Find a financial professional you can build a relationship with and work with long-term to support your business.
5. Know how much you want and how much you’re willing to accept
By the time you’re done with your business plan and financial projections, you should have a clear sense of how much you’ll need to get your business started. When applying for funding, you might not necessarily get the full amount you’ve asked for. They might give you partial funding, or funding over a certain amount of time. You need to know the minimum amount you need in order to effectively deliver your business objectives.
You also want to think about whether or not you want funding or financing. Do you want outright funding that might come with specific conditions depending on the organization, or a loan you will pay back?
These factors will help inform where you’ll apply for funding and who you will reach out to.
6. Think about where you’ll apply and put your energy
It can take a long time to secure funding. Writing applications, developing proposals and meeting with prospects are all time-consuming activities that take even longer to do right.
You can’t rely on any single funding opportunity, but you can’t expect to get funding from each one out there either. Be discerning about where you want to put your time and which opportunities will be most viable for you.
Also, look out for opportunities directly related to your industry through provincial/federal programs and associations.
Put a list together of criteria you apply to, then start to refine it based on which ones most align with your values and where you’d have a higher probability of securing funding. Be realistic about your strengths and what programs would be most worth pursuing.
7. Practice your pitch
As the founder of a startup, you’re the number one salesperson for your business. You need to be comfortable and compelling when you talk about it, whether to a banker, a potential investor, or anyone else in between. You need to be able to succinctly sell your idea at any time.
Prepare a succinct, snappy pitch that clearly demonstrates the unique value of your business. If you’re struggling with this, go back to your mission statement from your business plan to help you get started.
You are going to be presenting your pitch to a lot of people verbally and writing it on a lot of funding proposals. It needs to be concise, confident, and clear. Once you’ve created your pitch, practice as much as possible – in front of a mirror, a mentor, or someone else you trust.
8. Look the part
Regardless of whether you’re talking to a procurement person, a financial professional or a funder, you want to be representing your business in the best way possible. A huge part of this is how you present yourself.
People pay attention to appearances and non-verbal cues to assess competence and credibility, whether you’re meeting in person or on video. If you want to come across as a reliable business owner, you have to look the part.
Whether you’re meeting online or in person, you want to be appropriately dressed and groomed and demonstrate professional mannerisms and non-verbal communication like making direct eye contact and active listening.
If you’re on a video call, you’ll also want to ensure you have a clean, professional background, clear lighting and sound quality. Pay attention to how mannerisms translate on video calls.
Getting your business prepared for funding applications takes time and a lot of prep work. Once you’re confident about these eight items, you’ll be in a good place to start approaching funding opportunities.