It is often said that 95% of all small businesses started fail within their infancy. It is further said that one of the leading causes of small business failure is the lack of adequate financing. The main reason as to why many people decide to go into small business without adequate financing, knowing full well that they risk failure, is the great difficulty that’s encountered trying to obtain financing for small business enterprises. There are, however, a number of things you can do to overcome these challenges that beset attempts to obtain capital for small business enterprises.
Small Business Financing
One of the challenges that anyone trying to obtain money for financing a small business is likely to face is that which may be termed as the ‘credibility challenge.’ Many entrepreneurs tend to take this personally, but all that the financiers are doing is protecting their interests. They want credentials that show them you have what it takes to make a business succeed. Prior experience or technical training in the industry of your choice will go a long way here. It is all about showing that you have the credentials and if you don’t have any, you may consider partnering with someone who has (even if they come in as a nominal partner), just to show the credibility.
The second challenge that anyone trying to obtain small business finance is likely to face is what may be termed as ‘business plan viability’ challenge. You may be convinced that you have a viable business idea, but you still have to persuade financiers (who will be skeptical by default), if they are to put their money into the venture. Don’t take their doubts personally. Focus on communicating the facts and figures that show you have a viable business idea with confidence, and you will overcome this challenge.
The third challenge that a person trying to obtain working capital finance for small business is what may be termed as the ‘competition’ challenge: there are likely to be many other business plans competing for the same financing resources with yours. It therefore becomes essential, if you are to get proper financing, to set your business plan apart in some way. And no, this is not about using a fancy font or printing it on some flashy paper. It is about distinguishing your business plan substantially: showing a unique value proposition in the business that would make sense to everybody else.
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