Attracting more funding for scaling startups is challenging, with many roadblocks along the way. A 2021 survey conducted among small businesses showed that a mere 49% of startups applying for funding were approved, meaning the remaining 51% were rejected.
As a CEO, finding ways to fund your small business may seem like a never-ending journey, but there are ways you can increase your chances. We’ve outlined ways to set your business on a path for growth and provided tips for getting the funding you need.
Whether you’re a startup or an established business, you can use these tools and tips to help secure the funding you want so you can see the growth you desire!
Benefits of a Strategic Growth Plan
Successful CEOs use a business plan, or a strategic growth plan, as the backbone for their tactical business development. It helps guide them and ensure they meet their goals while creating a map for their business to head. As time goes on, these growth plans should evolve with the company, accounting for changes occurring in real-time.
Growth plans are essential for building your business as they are proven to help you land more lucrative deals, shorten sales cycles, and grow strategically. They also allow you to make a financial plan that outlines the amount of money needed to fund your projected growth and detail how you will use any acquired funding. Below, we will explore how you can get the most out of your growth plan to help you scale your business and set yourself in the best position to receive the funding you need for continued growth.
Stay Aware of the Financial Forecasts
Financial forecasts are your business’s financial guide, outlining how much money is needed to fund its growth. You project this data from your growth plan and your sales and expenditures. A financial forecast gives you a roadmap for what you can financially expect from your business and allows you to showcase to lenders how you plan to use any funding you acquire.
When you map out how you plan to use your funds through categorical expenses with a rough timeline estimate, it can help convince potential lenders and investors that your growth plan is viable. Of course, once you’ve secured your funding, your forecast may change, and that’s okay, but ensuring you have a well-thought-out plan can help you expertly manage your money and make the most out of your investment.
Use Your Growth Plan As a Growth Tool
A detailed growth plan is an excellent tool for managing your business and landing the funding necessary for growth. Startups to multi-billion dollar corporations all benefit from the guidance of a professional and organized growth plan complete with a realistic financial forecast. The CEOs of these companies know the power of using their growth plan as a growth tool, which is evident through their success and achievements.
How to Get Funding for Startup
Once you’ve set up a growth plan and financial forecast, you are ready to pursue funding for your business. This process is generally the most challenging and often met with disappointment. To help set you up for the best chance of success, we’ve outlined some of the best financing options available for startups.
AWS Activate
AWS Activate is a funding option created specifically for startups that provides up to $100,000 in AWS Credits for free given in chunks depending on your startup achievements. Activate provides your startup with the infrastructure capabilities required for unlimited growth, with the security and resources necessary for your peace of mind. Via AWS Activate, you receive credits applied to your AWS account that help cover your AWSusage, technical support, and a console that includes resources like ready-to-use infrastructure templates.
AWS Activate comes in two tiers to provide specialized services for different startups, Activate Founders and Activate Portfolio.
Activate Founders
Activate Founders is for bootstrapped and self-funded startups and offers $1,000 in AWS credits, $350 in Developer support credits, and many other benefits tailored to these particular types of startups.
Activate Portfolio
Activate Portfolio is for startups connected to an AWS Activate provider like venture capital firm, incubator, or accelerator. It provides up to $100,000 in AWS credits and $10,000 in AWS Business support credits, and many other tailored benefits.
AWS Activate is an excellent option for startups of all sizes, but many find the application process confusing. In that case, reach out to Cloudvisor, a Scout for AWS Active, specializing in guiding startups in the AWS Activate application processes. The company can help you get the most out of the AWS credits you’re given, helping you on your path to success.
Bank Loans
Bank loans provide finance terms for different lengths of time, generally three, five, or ten years. Banksregulate the interest rate (fixed or adjustable), timing, and repayment amount. When choosing a bank loan, be prepared to provide your growth plan and collateral, usually some form of personal guarantee. We recommend choosing a bank with a local branch or a credit union, so you can work directly with a loan specialist who can assist you with your loan application.
Friends and Family
Receiving financing from friends and family can be a mixed bag. On the one hand, you may find it easier to secure funding from someone you know; on the other hand, it can lead to problems down the line. You can choose to borrow the money through a loan or by exchanging it for equity. You should provide friends or family members with your growth plan, and it’s always a good idea to draw up legal documents with a lawyer to ensure everyone is protected and has clarity on the funding terms.
Bootstrapping
Bootstrapping is using your funds to finance your business. You can choose to use your savings, take out an SBA-backed or personal loan, or use a credit card or line of credit. The benefit of bootstrapping comes from maintaining all ownership and equity of your company but also means a greater need to begin receiving revenue quickly to continue funding your business.
Alternative Funding Sources
Alternative funding sources like crowdfunding, where you appeal to people to donate to your business, are available. You can also try to find a venture capital firm invests in startups using their own capital. Before using alternative funding sources, be sure to have a comprehensive understanding of the terms to ensure your and your business’ safety.
Angel Investors for Startups
Angel investors are individuals who provide business capital out of their own funds. They typically exchange capital for convertible debt, with the intention of converting the debt into equity later on. They may also exchange for ownership equity which is a residual claim on the ownership assets of the company. Generally, angel investors invest around $50k to $250k, with amounts rarely going over $2 million. CEOs seeking to run their business forever aren’t ideal candidates for angel investors; instead, those seeking to grow their business and either sell it or purchase more companies will benefit from this form of investing.
Tips Before Looking For Additional Funding
CEOs can use the following tips to help attract investors:
- Look From The Investor’s Viewpoint: Consider how the investor will think and fix any flaws they may point out.
- Sensibly Value Your Business: Don’t mistakenly value your startup too high; ensure you have realistic figures to present to investors.
- Provide An Exit Plan: Show investors how they will get their money back.
- Exhibit What the Strategy of Income Streams is for the Company: You should know how the business will generate money in the short and long term.
- Show Your Passion: Let investors see your passion for your business; it shows them you will put in the effort to ensure it succeeds.
The Takeaway
As a CEO, acquiring the funding necessary to grow your startup can be challenging. However, you can successfully grow your business by developing a solid growth plan and financial forecast. Also, by using AWS Activate to acquire free credits from AWS to build your infrastructure with the help of Cloudvisor, you can secure funding for scaling your startup over the roof.
FAQ
How do I get my startup to scale up?
Scale your startup by creating a growth plan, and financial forecast, and securing funding.
Which funding is best for startups?
The best funding source depends on the scope of your business and your long and short-term goals. Consider all the funding solutions mentioned above based on your goals.
What do startups need to scale and succeed?
Startups need a solid growth plan with a financial forecast and secured funding to scale and succeed.
