5 Signs Your Business Idea Is Ready For Funding

signs business idea ready for funding

So, you have developed an idea for a new business, come up with a unique product or service, and have decided that you are ready to take it to the next level. But what is next? 

For many entrepreneurs, being able to create a prosperous and successful business will require external funding from companies like Lending Valley. This can be a daunting task that requires a lot of planning, and sometimes it can be difficult to tell whether you’re ready to take the leap, or whether further planning is needed first. 

Whether you are looking to secure funding form an outside source, like a bank or other lender; or from within your circle, such as a friend, family member or from crowdfunding; any investor will be looking for evidence that your business idea is viable and that it’s a worthy investment. For business owners who are just starting out, and even for more experienced entrepreneurs, it can be hard to tell whether an idea is ready. To help with this, here’s our list of five signs that your business idea is ready for funding

Is Your Product Ready? 

Even if your product or service looks great on paper, the idea of agreeing to put up funds without any physical evidence can seem risky to a lot of investors. However, this can be addressed, and should be before you consider going to a company, friend or family member for an investment in your company. This first thing to check is whether the product actually works. Has it been tested? If so, what were the results? If you can show your product has already been successful, this will make investors feel much more comfortable. 

By providing a prototype, some physical evidence of your product, or a version or a programme or a website, this can help to put investors’ minds at ease. It also shows you’ve been thorough in your planning process and your product is viable in the market it’s designed for. Other ways you can make your potential investors feel more comfortable about your product are by carrying out research into your product and target market. You can do this by testing your product on your potential customers, by asking for reviews from previous customers, or by carrying out surveys. 

Who Are Your Customers? 

After creating a product, testing it, and feeling comfortable with the fact it can be successful, the next step is to determine your customer base. Who exactly are your customers; and do they actually need what you have created? In the real world, if you want your product or service to be a success you need to establish who exactly will be buying it; then, you can try and understand their behavior. Whatever you’re selling, it needs to offer a unique solution to a problem your customers are currently facing. 

Once you’ve been able to understand a bit more about your customer base, the next step is to work out how you are going to sell it to them. In order to do this, first, you need to consider what kinds of barriers might come up so you can think of effective solutions. In addition to this, you need to look at how your product fits into the existing market, both in terms of the product itself and the price you’re looking to charge, as well as how you can differentiate from your competitors. 

Do You Have A Management Team? 

Becoming an entrepreneur means taking ownership for your own success. But, it’s important to recognize that they may be gaps in your own skills and that you can’t do everything yourself. That’s where your management team comes in. In order to make sure your business runs smoothly and becomes prosperous, you need to hire a qualified management team, or make sure you have plans to do so in the near future. If you feel like you don’t have enough knowledge or experience in a certain area, having associates or mentors who can make up for it is key if you want to make your venture work. 

Do You Have A Business Plan? 

The next sign that your new business is ready for funding is that you have developed a business model or plan. Even if you’ve already detailed how you plan to acquire your revenue streams, you need to provide your potential investors with a detailed plan as to how you are going to achieve these goals, both in the short and the longer term. This will inspire confidence, show that you have planned your new venture properly, and help your investors to see how your business can make money. 

Additionally, a good business plan should provide further information to show how your business will operate. For example, you will need to include details about how your leadership team is organised, how many members of staff you will need, the legal structure of your company, your future marketing plans and the type of premises or equipment you plan to buy. By doing this, you will show your investors that your business idea is practical and will be able to operate in the real world. 

Tips For Developing A Business Plan

Here are some of our top tips for developing your business plan

Tailor It For Your Audience 

If the purpose of your business plan is to secure funding, it should be written in a way that takes into account what your investors are looking for. For example, someone who is considering providing funding for your business will be looking for clear explanations about returns and time frames for when they will get their money back. 

Research Your Market 

Entrepreneurs should make sure they thoroughly research their market, including its size, predicted growth, how the business will sit in the existing market, and details about the businesses main competitors. 

Include Enough Detail 

Although your plan needs to be clear and concise, it also needs to provide enough detail so that the reader has all the information needed to make a decision. The content should be accurate, the projections should be credible, and the plan should be free of spelling and grammar mistakes. 

Your USP

If you’re looking to secure funding for your business, you need to clearly describe why the investment is a good opportunity. What is your product, and how is it unique in the market? Why will customers buy your product instead of purchasing from one of your competitors? 

Do You Have A Financial Plan? 

As previously mentioned, having a solid business plan is crucial when it comes to making your business a success. However, you also need to consider your financial plan. This is just as important as your plans regarding your operations and is essential when it comes to showing how you plan to use your investors’ money. Some of the things you will need to consider when making your financial plan are how much money you will need, how it will be used, and how long you think it will take you to pay it back. 

When it comes to financial planning, it’s important to remember that all the number you have provided will be subject to scrutiny. Therefore, you need to ensure that all the costs and sales prediction you have provided are realistic. While your costs will be fairly easy to predict, your future sales might not be, and any predictions should be conservative. Some of the tools you can use to help with this include cash flow and break-even charts. These can help the reader to understand how many sales you need to cover your costs and whether the financing will be enough to make your business profitable. 

Your plan should also provide details about how you will use the resources to reach your business goals, as well as all your business expenses, operating costs and how much capital you believe it will take to get your idea off the ground. Financial planning shows your investors that you are responsible with money. Whether you are borrowing from a lender, or a friend or family member, you will need to show that you are able to pay them back on time and proving that you have planned the financial aspects of your business can help to do that. 

Next Steps For Funding

Setting up a new business can be daunting; but with the right planning and information, you can achieve the results you want and take your idea forward. After developing your product or service, making your goals and planning how you will achieve them, you should be ready to take the plunge and put your idea to your potential investors. It’s also important that you register your company properly. For packages and services that can assist with this, take a look at www.qualitycompanyformations.co.uk/, who have various options available to help with the company formation process.

I hope you enjoyed this article about signs that your company is ready for funding and financial investment from outside parties.

Interested in more articles about frugal finance and funding?

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