Obtaining startup capital for a small business can be quite difficult. Lack of access to capital makes starting a new business a challenge. The good news is, you can minimize the level of difficulty you may face when attempting to raise startup capital by properly preparing yourself. Proper preparation will ensure that you won’t struggle to get startup capital as much as the people who don’t prepare. Here are three reasons why you may be struggling to get startup capital for your business and how you can combat them through proper preparation–
- No Business Plan – Not having a business plan makes you look unprepared. A detailed business plan, with marketing plan and financial projections is needed to apply for certain types of startup capital. Since your business is new, it likely doesn’t have a track record. The business plan will provide lenders and/or investors with insight on the potential profitability of the small business startup. It’s never smart to approach a lender or investor without a business plan. It is likely that they will not take you seriously.
- Damaged Credibility – If your personal credit is damaged, it greatly reduces the number of options available to you to fund your small business startup. The only way around this is to start rebuilding/repairing your personal credit history as soon as possible. Repairing and rebuilding your personal credit can take some time. It may seem like it will slow you down if you decide to rebuild/repair your personal credit. However, the sooner you do it, the better off you will be. Having good personal credit will make it easier for your to obtain capital for your small business startup.
- Unproven Business Model/Concept – If you decide to do something that hasn’t been done before, obtaining startup capital will be challenging. Unless you have access to venture capitalists, angel investors, or a rich relative that believes in you and wants to fund your business, I suggest you stick to a business concept that has been done before, just do it better (I.e. put your own spin on it).