PREPARING YOUR BUSINESS FOR EXTERNAL FUNDS

Small and medium scale businesses contribute largely to the economic growth of a nation, although greatly underrated they serve as the largest employers of labours in our country but unfortunately the small and medium businesses fail very easily, and the reason for this business failure is not farfetched, business failures occur as a result of:

Lack of proper accounting
Lack of proper understanding of the business.
Lack of a book keeping strategy.
The absence of continuity spirit.
Lack of adequate mentorship facility.

Funding is very important for every business, there is no standing or established business without fund even if fund could be averted at the early stage by simply rendering service, growth and establishment calls for funds. The access to funds for businesses have become more easy gradually as the years go by, the method of accessing funds that we had before was very difficult from what we now have since so many local and international bodies are now concerned about the growth of SME’s .

As easy as it has become for small and medium business owners to access fund, it is not every business that will have the liberty to get these loans, in order to access the loans from organizations and financial institutions, there are steps that has to be carefully considered:

Things to consider before getting funds from financial institutions.

As a business entity who wants to access funds from organizations, you have to keep a proper record, the details of every funds that comes in and out of your business including your expenses has to be efficiently covered. The first thing any investor will want to have a look at before investing or funding your business is your record, this will help them ascertain the level of the business and what they stand to lose or gain throughout the investment period.

So many businesses fail as a result of giving out goods on credit, the level of small and medium businesses that sell on credit in Africa is very great and it is always difficult to get their money back, this makes it difficult for investors to check cash flow and without a regular cash flow, it will be difficult for investors to make any investment.

Learn to different cash flow from profit, there is a great difference between having regular sales and the profit that emerges from the cash flow, a regular cash flow does not interpret to mean more spending on personal needs. Personal needs should always be differentiated from the income of your business, if personal needs are placed on business income, there is no way an investor will put funds into such business.

Have adequate knowledge about your business, investors will regularly want to ask questions about your business from you and it is necessary to be able to provide answers to the questions asked.
Always get a support system from those you can trust, no one can handle a business alone, you need a team that is supportive, innovative and consistent.

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