In the world of business, cash rules everything. Even the best ideas, brightest products, and most innovative services requires the financial backing necessary to get said idea off the ground, and funding becomes no less important as your startup vision progresses from launch to full-fledged business.
If you’re a small business owner, or just hope to be one, then you absolutely must understand the many nuances behind funding your endeavors. To that end, here are four things that small business owners need to know about funding:
1. Pursue Government Cash
Funding is likely to be a struggle, no matter how brilliant you think your idea is, but, luckily, there are many sources of investment funds out there, not least among them your local government. Nearly every country offers some form of grant or bursary to citizens looking to launch small businesses, especially when those businesses will be headquartered in the community. There are, quite literally, many millions of dollars that are simply waiting to be claimed by someone fitting each government grant’s criteria – and, with just a bit of investigative effort, that someone could be you.
2. Script Every Dollar Spent
As any business advisor worth their salt will tell you, the first step in launching a successful small business is creating an unbeatable plan of action. This business plan will serve as your unerring guide through the dangerous financial territory that you’re about to cross, helping you to make decisions and holding you accountable for every decision that you make.
Whether we’re talking about millions in private investments or small grants that you simply hope we get you started and keep you going long enough to turn a profit, you know that every dollar will count for everything, especially during the coming of age of your business, making a good plan your most valuable tool in the face of a tough economy and potentially cash-strapped moments.
If you’re working with government grants or cash from private investors, there is a very good chance that you’ve already got a financial plan in place that covers all possible contingencies for the foreseeable future, leaving you with a battle already half-won.
3. Stick to the Script
If making a business plan is your first step, then sticking to that plan is the second, helping you to bring everything that has looked so good on paper into reality. This may sound like a simple thing, but the everyday nuances and unexpected headaches that any business is likely to send your way are sure to make things just a bit more complicated then you may expect.
It is these complications that will put your head for management to the test, determining whether or not you have the know-how and the discipline to spend investment money wisely enough to give your small business a fighting chance. If your business plan is thorough, then you’ve already got plans for contingencies, and you’ll need to follow them to the letter if you hope to make it out of them unscatched.
Once your business plan has been solidified, you’ve got to stick to the script if you want to be successful – period.
4. Once Funding Arrives, Tread Lightly
According to Merchant Resources Intl., one of the biggest mistakes made by small businesses is simple mismanagement of initial funds, often leading to an all out crash with a year or two, and serving as a fantastic example of why prudence is such a necessary thing in business.
So where have said small businesses gone wrong? They’ve had owners who spent as if the money in their bank accounts was their own, instead of belonging to their investors. Never forget that investment cash is nothing more than a loan, and treat it as such; if you wouldn’t go overboard on personal credit, you certainly shouldn’t be doing it with business investment cash!
Stick to your plans, take things slow and easy, and grow only as the market demands that you do so, giving you the best chance to make something successful once you’ve secured initial funding.