Starting a new business is an exciting time, but it's easy to get lost in the idea of success and lose focus on the funding that's necessary. It's common for many owners to try and start big but unfortunately their ideas often outweigh their budget. With bank loans becoming increasingly harder to secure you might have to reconsider your financing model or even scale down your initial business operation.
Here are seven tips suggested by Startup Smart that you should consider before you start finance hunting and lodging applications.
Keep it simple
When starting out it's best to start small. Bootstrapping early on will be difficult but it could be vital in generating a healthy turnover later down the track. Think about your original business model and try to determine what areas can be cut back.
Find some advisors you trust
Running a startup stretches well beyond the initial idea. There are legal issues that you may have to check on before running your business, financial documents you need to get in order for credit applications and much more. Identify areas that seem out of your depth and find a group of trusted advisors that can help clear your path, freeing you to do what you do best; run the business.
Research available grants
Sometimes your credit application won't quite fulfill the entirety of your expected financing. There are many grants options available to Australian small business that are easy enough to apply for, so do the research and see if your SME falls into any category for annual funding.
There are many reasons your grant application could be rejected, click here to read about four common grant application mistakes.
Make it visual
Many lenders won't have much faith in just an idea. They want to know how you plan to promote the idea and generally like to see a visual version of what it is you're producing. Before you start attending credit meetings you should aim to have at least one prototype of your product available.
Is there opportunity for a co-founder?
Many businesses that operate as sole traders often struggle to secure investment for their product. Finding a co-founder who is willing to invest in your business not only confirms the opportunity for more capital but also improves the likelihood of your credit being approved.
Get your finances in order
Just because you have the ideas and skills to manage your business doesn't mean you are best suited to handle the finances. Sorting your financial house is essential, especially if you aim to secure more finance from an external resource.
Create the best team
It's easy to hire a bunch of 'yes men' who do exactly as you please, but it's not necessarily the right course of action. Try to find people who are willing to work for you but also seem genuinely interested in pushing the business forward.
Hiring is the main function in selecting a great team. Here are five tips for hiring new staff.
Building on your start-up idea can be fun but it's important that you consider the business operation and outline what will be needed before committing your financial applications. In order to give your SME the best chance of succeeding it's a best you keepit simple, do the proper research and surround yourself with the right people.