No matter what industry you are in or where you are located, it will always be challenging to obtain the funds necessary to start your new business. Even in the most favorable economic climates, entrepreneurs still have to research microfinance solutions before starting their business venture. This research should include not only a full investigation of the market, but also the manner and means in which you can finance the business.
After all, securing the required funds for starting your own business is tough, and so you want to make sure you are more than prepared and aware of all your options. To learn more, keep reading for the top tips you need to know when it comes to financing your business.
1. Ensure your business plan is comprehensive and detailed.
No matter what type of financing options you end up taking, you are going to want to have a comprehensive and detailed business plan, as this is at the core of every successful business. Not only does having a detailed business plan help you to plan out the next few years of your company, but it also enables potential investors, banks, and mentors to see the value of your company.
In other words, to get financing or funding, you need to be credible; however, without a comprehensive and well-written business plan, it is going to be very hard to be taken seriously. A significant aspect of a good business plan is that you demonstrate the opportunities you have identified in your target market, as well as the goals you believe your organization can reach in the next few years. If you are unable to provide information about your vision and predicted revenue, then potential financiers can’t understand what you’re doing.
Therefore, the best business plans will assist potential investors in understanding your business as well as sharing your business objectives and goals. It should also explain your current financial situation and future projections and ultimately persuade financiers to help fund your business.
To achieve all of these aims, make sure your business plan includes an executive summary where you cover the essential information about your business and a business opportunity section where you put forth what sets your company apart and makes it a worthy investment. The financial section should include parts with your current financials, current and future loan requirements, your plan on how you will use the funds, and your repayment plan.
2. Research methods for financing your business.
When it comes to financing your business, there are several different routes you can go, with some options being more fitting for different needs than others. The more you research and understand these various methods, the better suited you will be to choose the appropriate one for you. Some of the most common methods for financing your business include savings, friends and family, credit cards, microloans, angel investors, crowdfunding, business loans, and lines of credit.
If you have the savings available to finance your business (also called bootstrapping), you certainly want to take this option, as it means that you can start your business in a manner that doesn’t mean going into debt right away. However, for many individuals, this isn’t an option, which is why other avenues exist.
In many cases, a microloan or a business loan is better suited for funding the beginnings of a business, as you can usually obtain a more competitive rate than what is offered when borrowing (or spending) from traditional financial institutions. When looking for a potential loan, you want to prioritize finding an interest rate that is as low as possible, as this will translate to owing less over time. Plus, with this type of loan, you can opt for a flexible amount of time in which you have to pay it back.
Keep in mind that there are a wide array of different loans available, so you want to consider all your options thoroughly. In many scenarios, a microloan is the best choice; however, there are also short-term loans, long-term loans, development loans, and equipment financing loans. Some loans are harder to qualify for, particularly if it is your first business, which is why working with an online lender may be a better option than a bank.
3. Continue to seek advice.
No matter what stage you are at in your business development, you must continue to seek advice from those who are experts. In fact, the best thing that you can do for your business financials is to continuously seek and acquire advice from experienced professionals in your locality. Not only will they be able to give you personalized advice, but they may be able to recommend the best ways for you to obtain financing.
Additionally, it is in your (and your company’s) best interest to work with an investor or a FinTech company that prioritizes customer relationships. By partnering with an institution such as this, you will be able to benefit from personalized service. For example, Emkan offers microfinancing solutions for individuals and small and medium businesses in the Kingdom of Saudi Arabia. By offering Islamic personal finance and corporate finance solutions, they seek to go above and beyond to satisfy customers’ needs in the easiest and most straightforward manner possible.
Therefore, when looking at potential investors, financiers, or mentors, you want to ensure that they will provide you with innovative finance products that fulfill your needs and share your values.
So, if you want a personal loan in Saudi Arabia, you should look into financing from establishments like Emkan. To be eligible, you need to be between the ages of 20 and 60 years old and have either worked in the Government or Semi-Government sector for 1-3 months or the private sector for 3-12 months.
Are you in the initial stages of creating your own business? If so, what are your current plans when it comes to financing? What aspects are you currently having difficulties with? Alternatively, if you have experience in this area, what additional tips do you have to share? Let us know in the comments below.
Saud Al Ghonaim is the CEO of Emkan Finance, a leading Saudi omni-channel FinTech brand offering innovative financing solutions such as micro, top-up, and installment financing to a wide range of audiences. He holds an MBA in Finance from the University of Akron and has 21 years of experience in a wide spectrum of retail banking, consumer finance, credit & risk management, products, development, sales management, and consumer finance operations.