According to Investopedia, one of the most common reason a business fails is financing or funding issues.
~ Investopedia.October 2022
However, many business owners, especially those running, startups, small businesses and minority owned businesses, struggle to show that they can make good use of the funding being requested and they cause funding providers major concern.
In many instances, owners submit funding plans that scare off funding providers. The plans demonstrate that the owner lacks understanding of good funding practices, how to optimize the funds or what to do if an unexpected change occurs in the market.
Inadequate funding plans can lead to the following:
- Misaligned Funding: Choosing the wrong funding option for your needs could mean either not enough funding or hindered business growth. Consider A tech startup aiming for rapid growth that chooses a small-scale research grant instead of venture capital. The grant, although providing funding, limits their ability to scale rapidly and the company must close its doors due to their competition taking over the market.
- Compliance Issues: Unintentionally violating regulations or missing out on compliance standards when managing funds could lead to legal trouble and/or penalties. Imagine a small business unintentionally using funds, intended for specific operational purposes, to cover unrelated expenses. The business then incurs penalties or legal consequences due to breach of funding terms or violation of legal regulations.
- Inefficient Allocation: Using funds in ways that don’t maximize their impact could result in waste. Say a company gets cash for developing a new product, and spends too much on marketing; even though the product gets the attention it needs, the final product lacks luster and fails.
- Lack of Strategy: Poor strategic or long term funding planning may cause an owner to miss out on opportunities. Consider a business unaware of available grant programs or funding partnerships that misses out on additional funding. An opportunity arises requiring funding that the company cannot take advantage of.
- No Risk Mismanagement, Monitoring and Adjustments: Without monitoring of fund performance, owners miss opportunities to make necessary adjustments or reallocate resources for better results. Picture a restaurant that secures funding for a menu revamp to attract more customers. After implementing the changes, they don’t track customer feedback or monitor sales data to see how the new menu items are performing. Without this follow-up, they might miss valuable insights leading to potential waste of resources and missed opportunities to enhance customer satisfaction.
Without a robust funding plan, there’s a higher chance of
- financial missteps
- missed opportunities
- a lack of strategic funding direction
- less opportunity for business growth and sustainability.
Funding Experts Provide More Than Just Funding
Tailor Made Business (TMB) Funding has a network of funding experts that partner with you for long term success. Over the years they have perfected a system with proven results that uses AI-driven software and expert coaching to guide owners to success today and into the future.
Schedule Your Free Funding Planning Session and Experience First-Hand Why Owners Have Trusted Their Funding Success To The TMB Funding Network.