CH 2b : Funding Your Business – 2020

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 (https://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.

I am revitalizing my 2020 article into a video.

Below is my article in 2020:

CH 2c : Pitching for Funding – 2020

As promised, this week I will talk about how to pitch to the bank or potential investors to get funding for your business. It is not enough to have a business plan, you also need to sell it to potential investors. Even after your business is operational, you still need to continuously pitch your products and services to potential clients.

There are different kinds of pitch but personally I just use two, a short or informal pitch and a long or formal pitch. The short pitch is used to get the attention and attract the potential investor to setup a meeting for a more formal presentation where you will need a Pitch Deck or a PowerPoint presentation.

SHORT PITCH

There are different kinds of short pitches such as the Twitter Pitch, where your pitch is limited to 140 characters, and Elevator Pitch, where your pitch should not be longer than 2 minutes or an elevator ride. Although there are a lot of variations in doing a short pitch this are the essentials :

A strong opener that will capture their attention.
Introduction of your business, including what you do.
What is the problem your business is trying to solve?
What is the solution of your business to the problem?
Why is your solution unique and why it is hard to copy?
What you need, i assume its money?
How will they be assured to get their money back with interest? If your talking to an investor, how much money will they make by investing in your company?
Close by setting an appointment for a more detailed presentation.

Here is a video of how to do an elevator pitch;

LONG PITCH

If you are successful in your Short Pitch, be it in the phone, social media or an elevator it means you need to prepare a Pitch Deck. Here are the essential information that must be present in your PowerPoint presentation:

A strong opener that will capture their attention.
What is the problem your business is trying to solve?
What is the solution of your business to the problem?
Your product that will deliver the solution.
Present the team, with short description, that will create the product.
Show the competition or alternatives to your product.
Describe your target market.
Present how you plan to make money.
Show your financial projections including how much investment is needed and how it will be spent.
A strong closer, including how much money they will make by investing in your company.

There is a 10/20/30 Rule in PowerPoint Presentations, it should have 10 slides, should not last more than 20 minutes, and contain no font smaller than 30 points⁽¹⁾. So where do you put your contact information if you already have 10 slides? I put it at the bottom of all my slides.

Lastly, do not forget that you are still talking to a human therefore always add eye candies or anything that will touch on the human emotion.

References:

10/20/30 Rule : https://www.pier8group.com/the-10-20-30-rule-of-powerpoint/

Tag: funding

CH 2b: Funding Your Business – 2021

CH 2b : Funding Your Business – 2020

CH 2c : Pitching for Funding – 2021

CH 2c : Pitching for Funding – 2020