In the spirit of reading the signs of the times, I would change my article this week into Funding Your Business. I received a private message (PM) this morning from one of the attendees of my “How To Start Your Own Business” Seminar. He asked advice on how to fund a business he WANTS to put up. His savings run out and needs to get funding so he can generate income. Which is our mission for Business Sanctuary (http://sanctuary.smepinoy.com/) having foreseen this issue being encountered by a lot of people in the New Normal.
My first feedback, is the business you WANT to put up feasible? Is there a market for your product or are you just asking for funding to build your clubhouse?
Are you trying to get a loan from the bank, or funding from anyone, without a business plan? Good luck! Having a business plan gives assurance to whomever you approach that you are legitimate. It also show that you have a plan and not just starting something on a whim.
Having a business plan also gives you the opportunity to analyse if the business you WANT to put up has a chance of succeeding. Is there a market need for the product you want to offer or is it something people can wait until after the Covid Pandemic to purchase? To answer this question, you can do market research. If you think market research is too tedious and difficult, you can try to use the Pestle Method which I touched on at CH 2 : The struggles of an Entrepreneur (http://smepinoy.com/the-struggles-of-an-entrepreneur/).
I will discuss in my future articles how to create a business plan, but for the meantime try to put yourself in the shoes of the bank. What are the things you will ask the business loan applicant before you approve their application? Example of some questions I might ask myself are:
- How will the loan applicant spend the money?
- How will the loan applicant give back the money?
Lastly, he told me all banks he visited said they are not offering loans for small businesses. As a guide, this are the institutions whom you can approach to ask for funding:
- Development Bank of the Philippines and Landbank are government banks which they use as conduits for loans to MSMEs. (https://www.dbp.ph/developmental-banking/micro-small-and-medium-enterprises/sustainable-enterprises-for-economic-development-seed/879-2/)
- If you Google “MSME loans in the Philippines” you would get a list of private institutions, not only banks, offering loans to MSMEs.
- Crowd and Seed funding, if your business project has a technology or social impact you can also Google “Crowd/Seed Funding Philippines” to get a list and instructions on how to do Crowd or Seed Funding for your business.
This are just a few institutional sources of funding for your business, but before you even start looking for funding, create a business plan. Next week I will talk on how to pitch your business plan.