Archive for the ‘business development’ tag
Are you looking for funding to start or expand your business? We will share some of the best strategies to achieve this depending on your specific situation.
Funding could be broken down into three main buckets which are credit, equity or grants. Of course you can use any combination of these to achieve your financing goals. Lets look at each of these in more details.
1. Credit – this approach is normally more appropriate as working capital for an existing company or financing for a retail type business that will generate revenue fairly fast. While you can use credit for developing a new product, the difficulty is that you would need to start paying the money back immediately, so you need to plan that out well. Of course if you have no other means to fund your business then this could be a way to get started or at least get things to a point where others may want to invest.
Credit can come as personal or directly off the business credit profile. People tend to shy away from personally guaranteeing loans in case the business fail it could hurt your personal credit. There are many providers out there that try to help you obtain credit through means such as shelf corporations with trade lines. Most of these schemes are mostly hit and miss, so no real surety of success. A very good means to get good terms on business loan is to investigate the SEC regulation D funding mechanism.
Another very good option for credit is to look for SBA backed loans especially if you are in the US. In this case, the SBA act as the guarantor for the loan which helps you to get more funding and even get advice to fine tune your business plan.
The one positive point about credit is that it does help you avoid the need to give up shares and equity in your business.
2. Equity – This is basically a funding means where you give up shares in your business for funding. The most basic form of equity funding is your own money and those of friends and family. The most advanced would be the use of Venture Capital investors. Whenever you pursue the equity route to funding, you need to consider the valuation of the business. The formula is [Valuation = Offer_amount/Offer_percentage]. This means that if you want $100,000.00 in equity investment and willing to give up 25% of the business for it, the value would be $400,000.00.
The best and simplest way for starting out and wanting venture funding is to check the SEC regulation D financing mechanism. The VC route is always there but its best to have the business at the certain point to get the best deal with venture capital funding. Another alternative for early equity funding would be Angel Investors.
3. Grants – A grant is basically free money given to your business. Most times grants can be obtained through government sources whether that is federal, state or local. They tend to focus funding on areas of interest such as new technology and the National Science Foundation (NSF) is one of the biggest grantor as they focus on advancing science in the US. The other source for grants would be private foundations that have specific interest and focus as a similar concept to what the government is doing.
The coolest and easiest way to get grants nowadays, is the concept of crowd funding. Sites such as kickstarter.com allows you to solicit money from ordinary people that basically likes your concept. This can be very helpful for new concepts where you have very little money on your own to get things to the next level. Bear in mind, there is no equity given in this case except that for larger amounts, you would promise the giver early access to the product. It’s basically like pre selling your product. Bear in mind you can use crowd funding for many needs.
Most business fail because of limited funding or cash flow issues. Its very important to get your funding under control as you progress through your business development. The above options are basic a snapshot of the tools available to fund your business. Find a trustworthy funding professional to guide you through this very important step in your business development.
Regardless of what business you are in, it comes down to having clients looking at the product or service then converting them to paying customers. There are a lot factors around these two aspects and we will examine them here briefly.
Prospects – This comes in two stages. The first step is researching the market to determine what is the real demand like for the product and service. You will need this information to get things going in the first place. The next step is to actually reach your prospect and this is the bread and butter of the business for starts. This is where you advertise, use referrals and focus your business to grow its contact base. The important thing here is to know your ideal customer and where to find them.
Conversion – Once you get people to look at what you have to offer, you need them to take action in giving you money for products or services. In this case, you need to make the offer compelling relative to the market place, competition and value offered. The next step in the conversion process is to ensure repeat sales with existing customers.
Bear in mind also for conversion is the support aspects of things, now with the Internet if you have lousy support in place, new and existing customers will find out and your business is toast. It therefore means, you need to have good support as part of your business process.
All of these can be measured and tracked to see where your business is heading and how to optimize each process along the way. In terms of conversion, there is always the benefit to up-sell to previous buyers to improve your profitability long term.
Despite how complex and challenging the business world may seem, it always come down to these two factors of getting prospects and converting them to buyers regardless of the business type.