Financing, is it an obstacle race?
Start-ups move into the next phase of growth with infusion of funds. Raising funds from the market is an important facet of business growth. However, many make the wrong move, which then pose challenges in attracting investors. Here are some hurdles that small businesses face and strategies to overcome them.
“The best entrepreneurs made me feel like the train was leaving the station whether I got on board or not,” once said Jon Callaghan. This is how the perfect financing pitch should make your investor feel.
Small and medium industries comprise a sizeable slice of a nation’s economy. However, most MSMEs miss the opportunity to expand because they are unable to attract investors and raise market capital. Consequently, these small businesses continue remain just that, micro enterprises.
Raising market capital is an important facet of business and fraught with challenges.
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Scalability quotient is crucial. Will the company flounder without founder intervention? Or hold its own in the market? Professionals and processes must be in place to cater to heightened demand should the need arise. Meticulously outlined scalability report of market size, competition, new product development, cost competitiveness and overall business strategy increases the possibility of successful fundraising. Support with market data and refrain from exaggeration.
Absence of robust financials are another deterrent to obtaining market capital. Prioritise and trim business operations in terms of their strategic importance. Before approaching the market, make sure your books are in order. If required, work out alternative sources to de-risk and buffer; strategize to maximise revenues and minimise expenditure within specific time frames.
Clarity on fund amount is necessary, whether with an angel investor or bank. Realistic financial forecasts with expected investment, long-term returns, and projected numbers must add up to justifiable and achievable milestones.
In-depth market insight, financial planning to a T and tough questions are some of the biggest hurdles that enterprises struggle with. Investing time and effort in understanding the space, market dynamics, and competitive matrix are the key to credibility and delivering results. As Jeff Platt said, “Spend time upfront to invest in systems and processes to make long-term growth sustainable.”
Source — https://www.linkedin.com/pulse/financing-obstacle-race-sunjay-kapur/
Author — Sunjay Kapur
