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From Idea to Investment: A Step-by-Step Guide to Funding Your Business

It takes money to make money, as the saying goes. Starting a business requires a significant amount of capital, but it isn’t always clear how to get funding for your business idea. And how you fund your business is an important decision that could affect your future. In this guide, we’ll help you maximize your chances of securing business funding by covering the steps involved in securing funding such as developing a business plan, pitching to investors, and closing the deal.

business plan meeting

Develop a Business Plan

Creating a business plan will help you think through your business idea and how to launch it effectively. Every new business should have a business plan, whether or not you’re seeking funding. But when it comes to raising capital for a small business, you will need to submit a solid business plan with your application. The plan will help show why investing in your company is a good idea. Here’s how to develop a strong business plan that can serve as your roadmap for running and expanding your business.

Why is it important to have a business plan?

A business plan is a comprehensive document that outlines your business idea, market analysis, financial projections, and strategies for success. A solid plan is essential for communicating your vision to potential investors and partners. It will also help you run your business effectively by planning for the future, anticipating obstacles, and more.

What are the key elements of a business plan?

A traditional business plan can take up dozens of pages. It requires more upfront work to flesh out each section, but this effort will pay off in the future. Alternatively, a lean startup plan is only one page and mostly a summary of key points. When securing funding for your business, a traditional plan is your best option. Here’s what you need to include:
  • Executive Summary: Your mission statement, the product or service you offer, and basic information about your location, employees, and finances.
  • Company Description: Provide more detail about what you do–the problem your business can solve for its target demographic or the gap in the market you’re meeting.
  • Market Analysis: Present your research on your industry and target market. Create a profile for your ideal prospect. What competitive advantages do you offer?
  • Organization and Management: What is your business’s legal structure? Who is on your leadership team?
  • Service or Products: What are you selling? How does it solve a problem or meet a need in your target audience?
  • Marketing Plan: What’s your strategy for attracting and retaining customers? How will you establish brand awareness among your target audience?
  • Funding Request: How much funding do you need and what will you use it for?
  • Financial Projections: Provide income statements, balance sheets, and cash flow for the previous 3-5 years. Give your financial outlook for the next 5 years. This includes forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets.
  • Appendix: This is a place for supporting documents and any other requested materials.
Ultimately, try to keep your business plan concise and to the point. Make sure to highlight your business’s unique features and use data and research to support your projections. If you need help creating a business plan, JRTI Company Lab and Small Business Development Center are great resources in the Eastern Panhandle region.

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Understand Your Funding Options

When it comes to funding your business, you can choose between traditional and alternative funding sources.

Traditional Funding Sources

This includes banks like JSB, that offer business loans and lines of credit, as well as venture capitalists who invest in businesses in exchange for equity.

Alternative Funding Sources

These include crowdfunding platforms, where people can support your business through a monetary contribution, often in exchange for a prize or product. Grants, whether from government agencies or charitable foundations, are also awarded to businesses that meet certain criteria.

How To Choose Your Funding Source

Traditional funding sources usually provide larger sums of money, but their application processes can be quite challenging and complex. Conversely, alternative funding sources, although generally easier to access, often offer smaller monetary amounts.

Not sure which type of funding or financing source is right for your business? Contact our lending team–we are happy to help.

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How To Pitch To Investors

To have a successful pitch, you must first understand the investor's perspective. Prospective investors want to see a solid business plan, a clear path to profitability, and a strong management team. Frame your pitch as a story–that will make it more compelling and engaging.

Create a pitch deck

A pitch deck is a visual presentation that summarizes your business plan and highlights the key points you want to communicate to investors. Pitch decks incorporate some of the information from your business plan. Using a pitch deck will help you capture investors’ attention and make your message easier to understand.

Closing the Deal

Once pitch day arrives, be prepared, confident, and ready to clearly communicate the unique value proposition of your business.
Before negotiating the terms of funding, think through your desired outcome in respect to the amount of money being invested, the equity you give up in exchange, and the terms of repayment.
It’s also important to understand the legal implications of any funding agreement. Consult with your lawyer before signing any agreements.

JSB is here to help you run your business!

Starting a business can be a challenging but rewarding journey. Jefferson Security Bank wants to be a partner in your success. We are here to help you with funding, advice and any other support you may need. Don't be afraid to reach out to our business lending team for assistance in securing funding for your business. We are committed to supporting entrepreneurs and small business owners in achieving their goals. Learn more about our options for commercial lending, business checking and savings accounts, and other business services. Let's work together to make your business a success!