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small business financing Tips

Simple Alliance, Kenya Limited


Prepare and Plan Thoroughly

Your business could require outside funding.  This could be through obtaining business loans. While seeking financing for your business, you need to create a good financial impression among your potential funders. This image enhances your prospects of securing financing.

Useful Tips

Your successful search for business finance is hinged on your meticulous handling of issues such as:

  • Suitably plan for the exercise
  • Business plan
  • Paperwork
  • Money expenditure account
  • Review your credit history
  • Rehearse your presentation
  • Objective scrutiny of ratios
  • Give an impressive first impression

Appropriately Plan your Time and Resources

Business financing from outside sources could be complex. Do not think that you will get a willing financier in a jiffy. Consequently, have a solid plan for your time and money. Factor in all tasks. These measures will preclude the possibility of you becoming exhausted. Further, you will be shielded from potential cash crunches amid the search for financiers.

Paperwork

Before approaching your potential financiers, you need to have accurate, up-to-date documents. Your accountant or financial adviser could help to organise the relevant documents.  Some crucial documents include:

  • Business financial statements such as income statement
  • Business tax returns
  • Business assets to use as collateral
  • Business papers such as licences
  • Names and addresses of not less than three credit references

Give a Remarkable First Impression

Ensure that your files are neat and readable. Appropriately dress in moderate business attire. These measures will present you as a capable, trustworthy, and professional businessperson.

Impartial Study of Your Ratios

Avoid presenting utopic projections in your pro forma. Be realistic. Give heed to industry norms. Generally, financiers prefer realistic projections.  ‘Ideal’ forecasts could put your prospective funders off, thus denying you cash.

Practice for your Presentation

Remember that you usually have one chance with any potential investor. You thus need to deliver a convincing presentation.  Practicing with your accountant, a colleague who has delivered a similar presentation, or with a friend banker could give you a head start.  Make the rehearsal as ‘real’ as possible.

Review your Credit History

Before seeking financing, review your past credit history. Many review prospective debtors’ credit histories. This check verifies whether you are creditworthy and if or not you are a good credit risk. Examining your credit history will give you useful clues.

Cash Expenditure Explanation

Clearly inform your potential inventors how you will utilise the money you seek.  A pro forma document detailing your expenditure for the next three to five years could be useful. In the pro forma, show how you will use the money and your repayment plan. Avoid vagueness as this does not convince potential investors that you will wisely use their cash. Customise your presentation to the aspirations of your potential funders. Emphasise impressive returns with equity financiers. Alternatively, focus on your robust repayment ability when addressing debt financiers.

Business Plan

To ensure that potential investors find your business plan useful, conduct a review of your most recent plan.  Your goal is to assess the accuracy and efficiency of the business plan in representing your business.  Major elements to fine-tune include:

  • Presenting a powerful executive summary that encapsulates your business at a glance
  • Presenting a convincing and reasonable marketing plan
  • Clearly explaining how and when your business will attain sustainable profitability
  • Making a honest evaluation of your competitors and the market
  • Backing any major assumptions with third-party proof

You may at times require outside business finance. So as to make your search for prospective funders easier, you need to take certain issues into consideration. Some important small business financing factors you need to take care of include; suitably planning   for the exercise, having a robust business plan, fine-tuning your paperwork,  delivering a convincing money expenditure account , carefully reviewing  your credit history, rehearsing  your presentation, objectively scrutinising your key financial ratios, and giving your financiers an striking first impression. These business financing tips will help to earn your prospective funders’ respect. You will be in a good position to be granted business loans.

Copyright (C) 2016, Simple Alliance Kenya Limited

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