What are the basic don’ts for raising funding for your business?

Every business requires some funding for its effective functioning. Sometimes businesses may get easy financing, whereas sometimes, it may be difficult for them to earn money.

 But if you are approaching your funding with the wrong perspective, there are high chances that you may not get it. It may be a waste of time and effort. You have to find out new ways to raise funding for your business.

According to a newspaper, there are on average 700000 new start-ups every year. Unfortunately, not all of them make it up. Many businesses face various hurdles in their first year of functioning.

31% of start-ups run out of cash and hence fail. So if you want to be away from that 31%, it is vital to attract the proper funding.

Also, many entrepreneurs make some mistakes while getting their funding approval. You should avoid these mistakes and look at them from a different perspective.

Raising the money at the right time

Sometimes entrepreneurs find it difficult to realize their own mistakes. But it is essential to look at your business from a different lens.

If your funding is getting rejected, you need to understand the reason behind it. Focus on those reasons and try to eliminate them from your business. During the process, do not panic. Instead, look at the Pitfalls and Hush them away.

You can also plan on taking out a loan with bad credit. In Ireland, many businesses follow the loan strategy to raise funds for their business.

Fund raising tips

1. Not raising the exact amount

The most common mistake entrepreneurs make raising too much money or too little money. If your business requires a certain amount, always raise that money.

Do not raise extra money for your business. Sometimes you may face difficulty raising this excess amount from what is required. On the contrary, some of the entrepreneurs raised too little money for what was needed.

This can actually bring in problems for your business. It can be challenging for you. If you are getting to less money, it will be difficult for you to cater to all your expenses.

A business has too many expenses such as employees’ salary, raw material costs, day to day expenses etc. With lesser money, you may not be able to cater to all these costs. Hence, whenever you are raising money, analyse the exact amount that you require.

The business has everyday expenses, and if they are not catered to from time to time, the business usually witnesses a downfall. On the contrary, if you are raising too much money, it can be difficult and pressurising for the investors.

If the investors are giving you too much money, they set their expectations higher for you. If you’re not able to fulfil those higher expectations, they may take their money back.

Hence, to avoid these mistakes, you need to keep a safety net for your business. Also, analyse your emergencies and ask for funds accordingly.

2. Offering too much share of your business

Some entrepreneurs may give too much ownership of their company in lieu of raising funds. Do not do this mistake.

Always share a significant piece of your business. It should sound brilliant to the other person and your business as well.

Try to get a significant share of the business with you. Raise funding but not at the cost of your significant business share. You can borrow money from money lenders in Ireland if you want additional money.

3. Not having an upscaling plan

It is always important to scale your business in the long run. Every business should have a plan of scaling. If you are not doing so, you are making a mistake. Many entrepreneurs feel that the company may grow automatically.

But it is not the case. You have to be following a methodological approach for your business growth. Everything should be in place, from infrastructure to raw materials to employees.

Even if one of the aspects is not in place, it can be difficult for your business to scale up. Hence, look at every aspect and try to scale up your business.

4. Raising Funds Too Early

If you are raising funds too early, that can prove horrible for your company. Do not raise funds that early in your business.

Consider the right time for your business funding. Timing is the most critical resource in every business and entrepreneur’s life.

Also, changes do not happen overnight. You have to wait for these changes as getting early funding cannot help you. Try to assess your business model and assess the right time to apply for financing.

5. Not having a Contingency Plan

An emergency can happen to any business at any point in time. Many companies do not consider this emergency since it does not happen often. Your business should always be ready for a contingency situation.

Keep a plan for your emergency and make it as practical as possible. For example, if you have a plan to follow and if the plan fails, you should always have a Plan B. In case of Plan B failure, you should always have a plan C.

Try to keep a backup plan for your business strategies. This will help you gain an advantage over the market and the competitors.

Trying alternate routes will do no harm to your business. Hence, be ready with a contingency plan for your business always.

Summary

First-time entrepreneurs need to avoid making these mistakes for funding. Even if you are trying to apply for funding, wait for the right time.

Timing plays a very important role in getting money for your business. If you are not following the right time, it can also be stressful and time-consuming.

You can refer to the mistakes as mentioned earlier and try to eliminate them from your business procedures. Also, you can look for professional advice in case you are tripping somewhere.