One of the most significant hurdles that new entrepreneurs face is securing funding to bring their business plans to life. However, there may be instances where your funding option denies your business plan. While this can be discouraging, it doesn’t necessarily mean the end of the road for your entrepreneurial dreams.
In this article, we will explore what you can do if your funding option denies your business plan and provide alternative solutions to help you move forward.
Assess the Reasons for the Denial
It’s essential to understand the reasons behind your funding option’s denial of your business plan. This can help you identify any weaknesses or areas that need improvement. Some common reasons for denial include:
1. Lack of viability: Your business plan may have been denied due to concerns about its profitability or market potential. Take a step back to reassess your plan and determine if there are any aspects that need refinement.
2. Inadequate financial projections: If your financial projections are not realistic or lack detail, it could be a reason for denial. Review your financial forecasts and ensure that they are comprehensive and based on accurate market research.
3. Insufficient collateral or personal investment: Many funding options require some form of collateral or personal investment to secure financing. If you were denied due to insufficient collateral or lack of personal investment, explore ways to strengthen your financial position or seek alternative funding options.
4. Poor credit history: Your personal credit history can play a significant role in securing funding. If your credit score is low or you have a history of missed payments or bankruptcies, it could impact your chances of getting funding. Take steps to improve your credit score or explore other funding options that are more lenient on credit requirements.
Revise and Improve Your Business Plan
After identifying the reasons for denial, it’s time to go back to the drawing board and revise your business plan. Take into account the feedback and suggestions provided by your funding option and make the necessary improvements. Get your answer by using the Ask-An-Expert feature. Submit your questions about your business, your plan, or your funding needs and have them answered by one of our professional small business consultants. Key areas to focus on can include:
1. Market analysis and competition: Conduct thorough market research and analyze your competition to demonstrate that your business has a viable market opportunity. Show that you understand your target audience’s needs and have a unique selling proposition that sets you apart from competitors.
2. Financial projections: Ensure that your financial projections are realistic, comprehensive, and supported by credible data. You may want to enlist the help of a professional accountant or financial advisor to review and validate your projections.
3. Management team and expertise: Highlight the qualifications and experience of your management team. If you lack certain skills, consider bringing in partners or advisors who can fill those gaps and add credibility to your business plan.
4. Mitigating risk: Address any potential risks associated with your business and provide strategies to mitigate them. This can instill confidence in potential funders that you have considered all aspects of your business’s operations.
Explore Alternative Funding Options
If your funding option denies your business plan, don’t lose hope. There are several alternative funding options you can explore, including:
1. Government grants and programs: Newfoundland and Labrador provide various grants and programs to support small businesses. Research what options are available to you and determine if you meet the eligibility criteria.
2. Angel investors: Seek out local angel investor networks or individuals who may be interested in investing in your business. Angel investors typically provide funding in exchange for equity or a stake in your company.
3. Crowdfunding: Platforms like Kickstarter and Indiegogo can be an effective way to raise funds from the general public. Craft a compelling crowdfunding campaign that highlights the unique aspects of your business and appeals to potential backers.
4. Small business loans: Consider applying for a small business loan through traditional banks or credit unions. Be prepared to present a revised and improved business plan that addresses any concerns raised by your previous funding option.
Seek Expert Advice and Guidance
If you’re feeling lost or overwhelmed after being denied funding, seek expert advice and guidance from professionals in the field. Consider consulting with a business advisor, mentor, or accountant who can provide valuable insights and help you navigate the process of securing funding.
While being denied funding can be disheartening, it doesn’t mean the end of your business aspirations. Take the time to assess the reasons for denial, revise and improve your business plan, explore alternative funding options, and seek expert advice. With determination, perseverance, and a strong plan, you can overcome this setback and find the funding needed to bring your entrepreneurial dreams to fruition.