How to Think About Funding: A Marathon, Not a Sprint
Smorgasbord helps people who are starting or growing a business, by providing funding and support to overcome the five main barriers to SME growth.
Research shows that finding funding is the biggest barrier to business growth, and often the most challenging to overcome. We’ve often wondered why it can be so difficult for people to get funding for their business, and found that it's the approach to finding investors that often lets businesses down.
Finding funding for business growth is a lot like being an endurance athlete. The process of finding investors and securing funding could be compared to training for a marathon, and as such requires a carefully calculated and planned approach.
Why is business funding like being an endurance athlete?
Many businesses treat funding as a single event in time. If you tried to approach an endurance event such as a marathon in this way, you would find that you quickly become unstuck.
Much like training for a marathon, securing funding requires precise planning and is very much an ongoing process.
A typical training programme for an endurance athlete is a continuous cycle, with different stages of varying intensities, as illustrated below.
Business funding should be approached in a similar cycle, with “The Event” in this case being the point at which businesses approach potential investors.
Funding is more about planning than funding.
It’s crucial to ensure that meticulous planning goes into securing funds for business growth. To know where to start, you need to ask yourself some questions about your business and its goals:
- What stage are you at?
- Where are you going?
- And how fast?
- How much do you think you need to get there?
- How much do you really need to get there?
- What are you prepared to give away?
- Have you thought about it from the investor’s side?
Some would argue that the final question is the most important of all. Research needs to be conducted to get inside the minds of potential investors, in order to find the best way to communicate your business goals and build confidence in the minds of funders.
The five barriers to business growth are Finance, Customers, Information, Tools and Advice. Although all research shows that finding funding is the biggest barrier to business growth, in reality, if an SME has access to knowledge and advice, everything will fall into place much more easily.
It’s clear that knowledge and communication are major issues for companies looking to secure funding. Indeed, when Smorgasbord have attended funding events, we have found that most funders were looking for borrowers, but borrowers were finding it hard to work out how to get funding. If businesses have the knowledge of where to look for funding, and the ability to effectively communicate with the right funders, then it is much easier to build these mutually beneficial relationships.
The British Business Bank (BBB) provide explanations and assistance to businesses who may be confused by the funding options available.
This infographic from BBB is a great way to figure out which kind of funding is most suitable for your stage of business and future plans. If you can fathom where you fit in this diagram, you’ll be in a much better position to successfully seek the right kind of funding.
Still confused by the options? Smorgasbord provide assistance with securing funding, as well as overcoming the other major barriers to business growth. Make sure to check out our Finance and Funding page, and if you have any questions, feel free to email me on Patrick@smorgasbord.tech.
Patrick Burge, Director at Smorgasbord