Signs That Your Startup Won’t Receive Funding

January 16, 2020 | Mason Roberts

 

Starting a business takes a lot. There are seemingly countless factors that contribute to the success level of your business. Everything has importance, no matter how minuscule it may seem at the time. For example, there are many business owners who go into their careers underestimating the significance of marketing. Now, more than ever, aspiring entrepreneurs think that they can post a photo on social media every few days and that is enough. Little do they know, if they put even the smallest amount of effort into the process, they would see their sales spike immediately.

Something of extreme importance in building your business, no matter what stage of development you may be in, is receiving funding. Funding is something every business owner needs and is not something everyone gets. When you are starting a business, it can be almost impossible to receive a large enough amount of funding. Frankly, lenders want to see statistics that startup businesses simply do not have. Many people often ignore the signs that their establishment is traveling down a dead-end road where funding is concerned. They think that everything will figure itself out, or hope that it will. If you want your business to become accomplished, you will educate yourself on the signs. The earlier you recognize your business may be steering away from receiving the funding it needs, the quicker you can find a solution to your problem. Not receiving funding does not mean failure. All it means is that you will have to work a little harder to get to where you desire to be.

If you need a little extra help to recognize the signs that startup funding may not happen for your business, here are the biggest tell-tells.

You Are Struggling Getting Meetings with Lenders

As a business, you likely will have to turn to a lender for the appropriate amount of capital to help your establishment. This is simply just the way this field works. No matter how much you wish you could develop money out of thin air, you cannot. When trying to schedule a meeting with investors, if you are struggling in a major way, that may be a sign that something is off. Startups oftentimes have immense trouble getting outside investors on board. You can be struggling for several different reasons. The most common is having a lack of stats to show them. This means a lack of sales, lack of credit, lack of resources, and so on and so forth. Also, if the beginning stages of your business are not strong, you do not stand a chance. This means the team you hire must be strong, your product unbeatable, a great location, and everything else in between. Even the best of startups often struggle to get a meeting with a lender, so it is vital that you make yourself a competitor. If you give other businesses a chance to show you up, they will. Remember that.

 

Your Market Is Not Big Enough

A business can only be as successful as its target market will allow it to be. You should not expect larger sales than you will realistically gain. This is something that a potential investor will point out to you as a flaw. If they see that your product is targeted towards a small age gap of young women, they will note it as something that will not work. If you want to be a success, you need to give yourself the chance to be. This means making a product that is suitable for a larger scale of people. If you make a product based on a trend, be sure that it can reach more than the obvious candidates. Also, have a plan to change if need be. Trends alter on the flip of a dime. Without much warning at all, your sales can take a hit. To become accomplished, be sure your business has a target market that will be helpful in the process, rather than ultimately hurt your chances.

Your Customers Are Not Active Enough

So you have a meeting with investors. Your target market seems to be the perfect one. This is all great. But they are not making a big dip in your business transactions. They are not as active as an investor wants to see. Well, this is something that can very well hurt your chances of receiving any funding, let alone the amount you need. In order for an investor to give you a large enough sum, they have to be sure that you will be good at the terms that come with it. Nothing is free. With borrowing money from a lender, you will have bills to pay back, with interest rates. It is not a check that is handed to you, and all is done. You have commitments once you receive funding from a lender that you must attend too. If you want to be sure that you will receive funding, your customers should be very present in your business. They are the source of your income, so are the indicators if you are earning enough revenue, or not.

 

You Do Not Receive Any Follow-Ups

A clear indication that you are not going to receive funding from a lender is if you do not hear back from them for a suspicious amount of time. This is something that, after your first meeting, will be an obvious yes or no to lenders. If you do not receive a follow-up meeting, you may be doing one of several things wrong. First, you may be looking at the wrong investors for your business idea. Maybe investors do not travel outside of their comfort zones when lending a business person money. The investor wants to be sure that they understand every part of the aspiring business owners' plan, as well as think it is a good idea. You may also simply not have a strong enough business plan. If this is the case, it is very fixable. Review it time and time again. Find what is wrong and fix it. You will have to put in hard work to receive funding, but it will be worth it in the end.