3 business funding mistakes to watch out for

A great product idea is at the heart of any successful business but you won’t get anywhere without the money to make that idea a reality. Finding funding for your company is the first hurdle you’ll have to overcome as a new business owner.

Topics: business, funding

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You’ve got a few different avenues for finding funding these days; you can go the traditional route of getting a small business loan or finding investors or you can use crowdfunding and peer to peer lending. Whatever route you decide to take, you have to make sure that you avoid these common business funding mistakes.

Using Personal Loans

People often use personal loans to fund their company rather than getting a business loan. They’re usually easier to get than a business loan, but there are a lot of pitfalls. Firstly, you aren’t likely to get as much money and the interest rates will be a lot higher, which eats into your profits. That’s a big problem in the early stages of a new business when you’re working with limited cash and you need to keep costs down. The other major problem is that your personal finances will take a big hit if the business fails and that can be difficult to recover from. You’re much better off going with a business loans company like www.smallbusinessloans.co instead. You’ll get more capital to run your business and the interest rate will be more manageable. On top of that, you’ll start building a credit rating for the company which will be a huge help if you’re trying to secure more funding in the future.

Not Having An Online Presence

The first thing an investor is likely to do when you approach them about funding your business is look you up online. Your website and social media presence give them some indication of how you’re doing so far. If you’ve only got a handful of followers on social media, that doesn’t look great and they’ll worry that you aren’t going to make enough sales to give them a return on their investment. Before you start looking for funding, make sure you’re using the right social media tools to build a bit of a following and generate some excitement around your products. That following will go a long way when you’re trying to convince investors to part with their money.

Not Giving Them An Exit Strategy

Investors aren’t giving you money out of the kindness of their heart. It’s a business decision and they’re only going to give you money if they’re confident that they’ll see a return and make a profit for themselves. One of the biggest mistakes that new business owners make is not giving investors an exit strategy (visit articles.bplans.com for more information). When you’re giving a pitch, you need to sell the business but you also need to lay out exactly how you’re going to give them their money back and when it’s likely to happen. If you can’t do that, they aren’t going to invest.


Avoid these mistakes and you’re far more likely to get the funding you need to make your business a success.

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