One of the biggest challenges for entrepreneurs and small business owners is finding the funds to launch – and eventually grow – their businesses. Fundraising is an important exercise and carries both positives and risks. It increases the market’s reach and enhances a business’s visibility. However, the flipside risks default if the firm does not reach the desired milestones.
Before fundraising, one must do homework on how the money will be repaid. One should avoid borrowing funds without having clarity on the financial model in all three scenarios- best, normal, and worst case. In the initial days, it is desirable to do business without external monetary support until the cash flow cycle becomes clearer- bootstrapping.
Generally, a Bank loan is the most preferred source of funding; however one has to be mindful of many delicate issues before approaching the bank. 10 Questions to Answer Before Applying for a Bank Loan.
A closing word: One point should be clear when it comes to financial planning for SMEs: the do-it-yourself drive that helped you start your business will not serve you well when it comes to managing the many financial issues created by that business. This is where professional expertise often becomes necessary. Exercise your privileges as Boss and seek the service of qualified business financial planning professionals. Their advice can make all the difference in improving your chances of business success. First, be part of the exercise—no Blind Faith.