10 Guaranteed Ways on How to Prepare Your Business for Funding in Kenya

an angel investor

When you want to start a business, one of the most common challenges you will face is getting funding for your business.

A lot of entrepreneurs worry about how they can raise funding for their budding businesses.

This is particularly difficult when they do not know how to prepare their business for funding.

Do not let this be the setback toward achieving your dreams.

There are many loopholes that you can use to prepare your business for funding.

Preparing your business for funding is important because it saves you time and it will make your application process easier.

You will also be able to have a clear vision of how and when you will utilise the funds and pay off the debt loans you will incur.

A lender may also need to see your preparation plan and it will be easy for you to negotiate the best deal with them.

Also, when you prepare your business for funding, you have a greater chance of getting your required funding.

In this article, I will take you through everything you need to know about how to prepare your business for funding.

I will also give you the different funding options you can consider when you want to get funding for your business.

10 Ways to Prepare Your Business for Funding

If you want to prepare your business for funding today, consider taking these steps.

  1. Do your research 

Before you start preparing your business for funding, you need to do your research on the funding options available and what you must do to qualify for them.

A lot of people want to skip over doing their research and think they will get the funding they need for their business right off the bat.

Always do your research and consider the funding options that suit your budget, lifestyle and personality.

This will allow you to be able to pay off those debts ( if you are planning to take out a loan) and run your business comfortably.

When you are doing your research, don’t forget to ask yourself why you need this funding.

When you do your research, it makes it easier for you to meet the necessary requirements to get funding from different options.

You also avoid mistakes that may cost you money or your business altogether.

As you start preparing your business for funding, always do your research so that you can easily get funding.

  1. Update your cash flow forecast regularly 

Knowing your cash flow forecast is of utmost importance when you are preparing your business for funding.

When you are updating your cash flow forecast for funding, you need to start looking at your stock levels and reviewing them.

You also need to issue sale invoices so that you know how much money you need.

If you have any suppliers you are working with, you need to contact them and review your contractual agreements.

You also have to start considering options that are going to reduce your overall capital expenditure so that you can get funding.

One of the best ways to forecast your cash flow is to use automated payment methods with your clients. This is going to be easier and more effective to track.

When you know how your cash flow is going, you will be effectively preparing your business for funding.

  1. Prepare a solid business plan

This is perhaps one of the most important steps when you are preparing your business for funding.

A business plan is a strategy document that gives you an idea of what your business is, what you are doing with your business now and what you plan to achieve with your business.

Lenders usually need to see your business plan before they can give you any funds for your business. Do not skimp on preparing your business plan.

Make sure your business plan is detailed so that your lenders can find all the answers they need there.

For example, a solid business plan must include a business overview, an executive summary and your client base.

You also need to include your latest financial report, market analysis and the competitive landscape the business is operating in.

Do not forget to do a SWOT analysis and include that in your business plan.

Effective business plans also have a growth strategy since it is considered important by lenders before they invest funds into your business.

Always have a solid business plan when you go out looking for funds for your business.

  1. Gather all your documents 

When you want to get funding for your business, you need to prepare all the necessary documentation that is needed by lenders.

Always assemble these documents prior so that you can save yourself time and a lot of headaches when you want to submit your application.

Always consult and find out what documentation is needed for a particular business because they can never always be the same.

Some of the documentation you need is the latest bank statements, the latest accounting data from your business and the last year’s full turnover.

Prepare these documents then submit your application.

  1. Evaluate your business

It is important to evaluate your business before you look for funding so that you can know if your business is in the right place for funding.

When you are evaluating your business, start by checking the cash flow of your business.

If you are getting more demand, you most definitely have to boost your sales.

If you are thinking about investing in new technology and systems to help you undercut competitors, you also need to get funding for this.

If you also want to go into different marketing strategies, you have to incur these marketing costs.

Do a thorough evaluation of your business so that you can find out what is missing, and how much it costs and then apply for funding.

  1. Understand your choices for funding

There are numerous funding options available for you.

Some of these funding options include taking out loans and some include partnering up your business with investors or interested persons.

Before you choose a funding option, especially those which need you to take out loans, check to see the rate of interest that you will be paying on the debt.

You do not want to take out a high-interest loan and then end up being strapped in debt for the rest of your life. It will overwhelm you and you won’t manage your business effectively.

If you are partnering up with someone, make sure that you have outlined the terms of the agreement for which you will manage the business.

You will avoid arguments and lawsuits when you do this.

  1. Perfect your pitch 

No matter where you are getting your business fund from, you need to prepare and perfect your pitch.

Your pitch should be about your business, what you are doing with it and what you want to achieve with your business.

Make sure that you prepare your pitch earlier before meeting with investors and lenders.

In your pitch, don’t forget to mention all the amazing plans that you have with your business and how successful your business currently is.

When you are talking about your business, mention the competitive advantage that your business has in the industry and the kind of market environment it operates in.

When you do this, you will increase your chances of getting funding for your business.

  1. Boost your credit score

Do you use credit cards? You have to be very careful not to overuse or abuse them.

Credit cards are very useful to help you achieve your long term goals like funding your business.

If you have an overall good credit score, your lenders are convinced that you have the ability to pay their money back. To have a good credit score, start making more than the minimum payments and do not dun huge balances on your credit cards.

Remember, you do not want to be charged a high-interest rate on the balances that will keep you in debt.

When you have a good payment history, you can ask for a higher credit card limit.

This will allow you to fund your business.

Credit card companies will also give you bonuses and reliefs which is going to be very useful when you want to fund your business.

  1. Pay attention to your financials 

To get funding for your business, you need to start looking at your business financials and analyse your return on investment.

Go through what you have as capital and list all the expenses that you incur with your business.

When you become aware of what your finances are, you will be able to provide an estimate for the amount of money you need for funding and prepare yourself accordingly.

If you cannot prepare your finances on your own, get a financial advisor who is going to take you through your finances and even guide you on how you can apply for business funding and be approved.

Always work with a team whenever you are in doubt.

You will be glad you made this decision when things start to move much easier.

Do not forget that your lenders will also need to see your financials so you cannot be too careful here.

  1. Get business valuation 

Business valuation means the value of your business for which you need funding. This is how much your business is worth.

You can get your business valuation from the startup costs that you had to incur when you were first starting this business.

If there are any additional costs that you have to incur, you are also going to list that and mention that to your lender.

If you need to reorganise or revamp your business, then this calls for a higher valuation of your business to get the appropriate funds.

I have to tell you though, that getting a valuation for your business is not going to be easy.

You need to have people who are going to help you to have a fair and accurate business valuation.

This will be very useful to your lenders when they want to give you funds to operate your business.

11. Be patient

Your business requires your patience and so does funding.

No one wants to cough up money for a business without understanding WHY they must do it.

Some, on the other hand, want your idea.

Be patient and don’t give up.

Find options for raising money for your business and don’t rely on ONLY one method/way.

12. Focus on the core idea of your business

To get funding for your business, ask and answer the question, WHAT DO YOU DO AND WHY?

What are the benefits of your business to the public?

13. Keep raising capital

The more funding options you show to investors, the more they get encouraged to invest in your business.

Don’t sit down waiting for manna.

Manna ONLY comes to active and action-taking people.

14. Know your financing options

There are many options to raise capital for your business, like borrowing from the bank or using your skills to raise money for your business.

Funding comes to those that look for options and aren’t sitting pretty.

15. Keep learning more about your business so that when investors come in, you’re in a position to answer crucial questions

What are the Best Funding Options for Your Business?

Here are the funding options you can use for your business. 

  1. Crowdfunding

You probably know what this is.

Crowdfunding is what we call Chama in Kenya.

This is a good way to raise funding for your business.

All you have to do is bring people together who are ready and willing to raise funds for your business. It helps when you share a common goal or vision with them.

Crowdfunding is very effective if you want to raise your business funds fast.

  1. Personal investments

You can invest in your personal assets and get funds for your business.

If you have any valuable items that you no longer need, you can sell them and get money for your startup.

You just have to make sure that they are things you don’t really need that can make you money.

Don’t sell things gifted to you by friends or family.

If you have savings, you can use that as business funds.

  1. Bank loans

Another funding option for your business is bank loans.

Banks offer loans to entrepreneurs to help them fund their startup businesses.

You can always seek startup loans from the banks, but make sure you consider the different banking options available, as well as the interest rates they charge on the loan.

If you do not do your due diligence here, you will end up regretting it in the future.

You do not want to start your business strapped in debt.

  1. Government grants and programs

If you are looking for a non-demanding option for your business, you can consider government grants. There are government programs that offer financial aid to entrepreneurs for their startup businesses.

You can get funding by signing up for these government programs. You will be required to pitch your business idea to the government agents after which they will assess the business viability and provide funds for your business.

  1. Friends and family

Friends and family are the closest you can get to raise funds for your business.

All you have to do is to talk to them about your business idea and they will support you with funds if they can.

Getting funds from your friends and family is much preferred because sometimes you don’t have to pay them back.

Your friends or family can give you this money out of goodwill, so you don’t have to worry about debt.

Make sure you have cleared this with your family and friends so that you can know where they lie with the funds they are giving you for your business.

  1. Look for a partner

This is another way to get funding for your business.

Since most of us do not want to go the borrowing way to cater for our business funds, you can find a partner who is ready and willing to share these costs with you.

Find an interested person and pitch your business idea to them.

If they are in agreement with it, they will partner up with you and help you cater for your business needs.

Just remember that they have a say in the business, depending on how the contributions are made.

This funding option is also greater if you are contributing your personal investments and savings.

  1. Venture capital

Sometimes you want to look for people who are willing to invest funds in your business.

If you want to sell your startup business idea to investors, you will get what is called venture capital funds for your business.

You just have to make sure that investors are impressed and convinced about your business.

This is what they look for before they choose to put their money into any startup.

  1. Angel money.

This is another funding option that you should consider when you are looking for funds for your business.

We have very wealthy individuals who are philanthropic and want to support small firms.

All you have to do is to pitch your business idea to them and they will invest directly into your business to support your personal or business goals.

Angel money is easy money that you do not need to pay back.

This is a really good funding option. 

9. Use your skills

Borrowing money and convincing others to believe in your idea/dream is one of the hardest things for any entrepreneur.

What skills do you have and can use to get you money for your business?

Is it writing? Why not offer your writing skills to businesses?

Using your skills may take longer than you expect because not everyone knows how to monetise their skills.

Also, using your skills to raise money will help you know how to run a business or how to manage a business in ways you hadn’t thought about.

How Do You Write a Winning Business Plan?

A winning business plan has the following qualities:

What’s the market interest? Prove that customers are interested in your idea.

How do you plan on raising the money?

Your business plan has to have sound financial projections

How will you price your products for profit?

How Do You Get Investors For a Startup

The following are ways to get investors for a startup and they include:

Research investors that share your idea and vision

Brush your networking skills

Tell the investors WHY they must choose you or fund your business and not the other one.

FAQs on How to Prepare Your Business for Funding

What do investors look for before funding a startup?

Investors look for the team, product, market size and value.

Are angel investors rich?

YES, angel investors are rich.

Can you start a business with no money?

Yes, if you’re an amazing marketer you can start a business with no money.

Or you can use your skills to make money for your startup.

If you have the required tools and equipment for your startup, you don’t need money to start.

Don’t let the lack of money stop you from starting your business.

My belief is that to have it easy on yourself and your business, have money – lots of money.

Bootstrapping is causing deaths and stress.

Can anyone invest in a startup?

YES, anyone can invest in a startup.

How do I get the courage to start a business?

You get the courage to start a business by

Having belief in yourself

Setting goals for what you want to achieve

Surrounding yourself with positive people

Preparing and researching your idea

Understanding what customers want

Getting capital for your business is hard.

However, if you have long term goals with your business, you do not have to call it quits when things get tough.

Don’t close your business when you do not have enough capital.

Sometimes you may have come a long way and closing your business is not an option.

If you want to scale your business or get your sales up and running, consider getting funding for your business.

You have to know that you cannot get funding right off the bat.

Make sure you do your due diligence and do not skimp on the details.

Don’t be afraid to ask for help.

Understand the importance of teamwork and always know that there are people who are ready and willing to contribute funds to help you take your business to the next level.

Look at the different funding options and don’t forget to do your research and go for a funding option that suits your needs.

Have you ever wanted someone to help you fund your business?

Have you sought funding for your startup?

Did you get the funding or was it a task you will NEVER do?

Leave a comment

*

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Online Businesses / Work in Kenya