Funding is a key ingredient in all entrepreneurial pursuits, whether you have a newly budding business or an established company seeking financing for sustainable growth. But despite its necessity, funding can be difficult to access for a number of reasons. Kathryn Petralia, co-founder of Kabbage, a leading online lending platform which has funded over $2 billion to help businesses grow, says entrepreneurs often struggle to find the right access to capital that they need to help take a business idea to new heights.
“Entrepreneurs today are increasingly seeking reliable sources of funding to match their fast-paced growth, and are eager to invest in great opportunities,” Petralia says. “Many of those seeking smaller loans or investments have been underserved by an existing process that is highly competitive and risk-averse.”
In light of this, Petralia noted there are several ways for an entrepreneur to stand out from the crowd and secure the funding they need to launch the business of their dreams.
1 – A good story is everything
Spend time developing a solid story around your business idea, underscored by the reasons why it is not only important to you, but how it can also help solve a significant problem for others. Show your inexorable passion for your mission and your vision – your energy and enthusiasm will resonate with others and encourage stronger interest in your business.
That said, while you want to put forward a good founding story, you also need to know how to communicate it simply. If you’re struggling in this area, reevaluate your approach. That may mean making necessary tweaks to a pitch or cultivating a stronger narrative that quickly communicates your business mission.
2 – Be organized
Using organizational tools can help investors better assess your business’ performance. Many financiers will require documents that exemplify strong performance. Great bookkeeping tools such as Xero, Quickbooks, and Expensify can keep you organized and prepared.
3 – Establish your business credit, but be careful about spending
You shouldn’t use personal credit for your business, and should instead begin to establish the business’ credit separately. Not only will using your own credit decrease your personal credit score, you won’t be helping your business by doing so.
To show your business is a safe investment, get a business credit card. They are a reliable tool that can be helpful especially during the early stages. Many business credit cards have a low credit line, and while they are likely too low to be a significant source of funding, they are a great way to begin establishing business credit.
Although credit cards are advantageous, be careful about how much you spend. Just like a personal credit card, overspending can hurt your business credit and have a negative impact on how lenders see your business as a whole.
4 – Build a strong team, including a business partner
You can’t create a prosperous and thriving company on the work of one person alone; it takes multiple people to encourage that growth. Investors want to make sure your team is durable and suitable for the task at hand. That said, build a team that investors can believe in and who will achieve your metrics for success. Highlight the team’s individual experience and explain why each is a great asset — the team dynamic is important to investors, so show how their talent and expertize will enable a successful business.
Finding the right business partner is critical. Not only can they provide alternative opinions as the business grows and changes, but they can also be great networking sources. Effective in all stages of business growth, having a partner to help generate ideas, opinions, and perspectives can better position your business for both success and funding.
5 – Don’t rely on just investors for funding, consider alternative lenders as well
Often, when people think of funding, they think of outside investment from a third party, but there are other options available for fund-seeking entrepreneurs.
Although bank loans typically have a lower interest rate than most other options, they can be extremely difficult to get and the application process is often excruciating. In addition, they often don’t cater to smaller businesses seeking less than $250,000 to grow their company.
On the other hand, alternative lenders like Kabbage can offer more flexible funding for businesses, with a simple and direct application process that won’t require tons of time to complete. For this reason, online lenders might be the best choice for a business looking to grow.
Ultimately, while accessing capital to boost growth of your business can be daunting, there are ways for entrepreneurs to set themselves apart from the crowd. Petralia reminds business owners, “if you are a small business or entrepreneur in need of extra capital, look to take an out-of-the-box approach to achieve the next step in your business journey.”