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12 Business Funding Challenges + How To Overcome Them

What is the biggest challenge in getting a business funded?

To help you in your journey of getting your business funded, we asked entrepreneurs and finance experts this question for their best advice. From implementing a credible sales plan to adjusting business plans to fit funds, here are several pieces of advice that may help you fund your business.

12 tips to help you overcome challenges when getting your business funded: 


Having Enough Market Research 

The biggest challenge in getting a business funded is having enough market research to support your product or service. Hiring agencies to perform this requires a large investment up front, and doing it yourself can easily breed lots of bias determining who you are sampling. All in all, it is important to be very clear on who your target market is and ensure you understand them in and out. If you do and you can prove to stakeholders that there is a need for your business, you will be victorious!

Vanessa Molica, The Lash Professional

A Credible Sales Plan

Without a believable plan to generate sales, getting funding for a business is going to be tough. There are several ways to solve this problem. You could pre-sell a product to 10 customers and then put those commitments into your business plan. Alternatively, if you have a good reason to believe that you will get customers from your network, list specific people in your network who are likely to become customers.

Bruce Harpham, Technology Marketing Consultant

Fears With Self-Funding

When you self-fund a company, the biggest challenge to overcome is your own fear. Sometimes you fear losing money. And as odd as it may sound, sometimes you fear the success that may come with a substantial return on your investment. The bottom line is that you can be your worst enemy when you self-fund a business with aggressive growth plans. The best thing I’ve found is coming to grips with the reality that you actually lose more by not trying than by actually losing your investment. If you can get comfortable with that reality, going all-in on self-funding may be a viable path to growing the business.

Brett Farmiloe, Markitors

Unknown Numbers

For a lot of small businesses, they don't know their numbers. When you don't have your budgets and breakdowns down to a tee, it can be hard to get funded since there aren’t any hard set numbers for a bank to work off.

Loren Howard, Prime Plus Mortgages

Bank Loans

To increase your chances of obtaining financing, you need to choose the most suitable financing alternative. A bank loan is also a reliable financing option for a small business or startup. You may also be able to apply for government-subsidized bank loans or low-interest loans. Small Business Administration (SBA) loans may be a good option. Most traditional bank loans require at least two years of tax returns showing gross and net profits. In other words, you need a good credit history. They will always ask you for your complete traditional business plan. Make sure it includes financial statements or projections, personal and business credit reports, tax returns, bank statements, and growth projections.

Oliver Andrews, OA Design Services

Increase Productivity While Maintaining Cash Flow

New business owners need enough money to allow a reasonable amount of time to work out the kinks, learn from their mistakes, and build a following. The most challenging aspect to increase productivity and ensure success is maintaining a positive cash flow, which can be especially difficult in the early stages. Creating a business model for potential investors and or allocating the proper resources on your own is necessary. It will take focus and a clear vision to assess the costs of launching your company, enabling you to scale accordingly.

John Berry, Berry Law

Taking The Plunge Into Your Savings

Finding the right way to approach funding your business can be tricky and involves taking risks. We are a self-funded company, and the biggest challenge was committing to pouring in our savings and taking the plunge. Determining the costs to grow and scale accordingly and efficiently within your budget is essential. Along with having patience in creating brand awareness and establishing yourself in the competitive market, these factors will be crucial in defining your success.

Katie Lyon, Allegiance Flag Supply

Adjust Your Business Plan To Fit Your Funds

One of the biggest problems people have when attempting to get their business funded is creating a business plan that requires a certain amount of capital. Then, when they attempt to get the funds, they're offered a lesser amount. If their business plan is scalable, they can look at the capital being offered and choose the most important MVP aspects of their plan and move forward with those. Then, as new capital becomes available, you can bring in those aspects you have to leave out initially. If you can't scale at all, however, you're more likely to have a hard time getting 100% of the start-up capital you require, and you may never be able to start your business.

Mark Varnas, Red9

Demonstrating A Positive Cash Flow

The biggest challenge in getting a business funded is most often demonstrating a positive cash flow. To capture the attention of investors, you need to demonstrate that your funding request is in line with your financial projections and that requires strong financial and analytic skills. If these are not your strong suit, I recommend working with a professional who can help you get these items in order. The better the cash flow, the higher the likelihood you will get your funding.

Kimberly Kriewald, AVANA Capital

Risk Management

Financing is often the biggest challenge for most small businesses. Banks and investors are well aware that while company stocks or loans have the potential for great reward, they also come with significant risks. The risk is even greater for newer small businesses with little to no credit history. However, with the right business plan, the internet provides access to more funding resources. You can use Google to find more angel investors and venture capitalists. There is also crowdfunding on platforms like GoFundMe.

Brian Greenberg, True Blue Life Insurance

Collateral

The lack of assets or collateral that business owners have readily available when applying for a loan is the hardest part about getting a business funded. That’s why our company centers around unsecured business loans that help business owners get started with no assets, and without putting collateral such as the home or retirement funds at risk. . This speeds up the approval process so business owners can start running their business quicker rather than filling out mounds of paperwork and going back and forth with a lender for months on end.

Grant Ferguson, Unsecured Funding Source

Standing Out

The hardest part about getting funding for a startup is simply standing out from the competition. There are more entrepreneurs seeking funding than ever before, and that means that investors now have more options as well. This is why it is so important for your proposals to hit and deliver on every mark that demonstrates a positive ROI for your investors. They want to see that this is not only a smart investment, but a lucrative one!

Carey Wilbur, Charter Capital

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