How to... Find funding when you're an SME

Looking for investment? Read on for our beginner's guide to finding funding...

Small-to-medium-sized enterprises (SMEs) are instrumental to the growth of both our economy and our societies. With over 5.5 million businesses classified as an SME (with between 0 and 250 employees) at the start of 2021, they account for three fifths of the employment and around half of the annual turnover of the private sector. That’s 16.3 million employees, and an astonishing £2.3 trillion being contributed to the economy. 

But despite impressive numbers like these, finding that all-important funding that can take you to the next level can be difficult, and fraught with challenges. Identifying the right people who might want to, or will be able to invest what you need, and making sure you’re pitching yourself just right so you don’t blow any opportunities you do create is fundamental. Luckily, there are things you can do to improve your chances and, if your idea is the right one, at the right time, you’ll get there. 

Start by asking yourself…

As the founder of your company, what’s your vision? Where do you see the business going? What market opportunities do you see? What are customers asking for? This will likely call for consumer research, and a brand audit. 

Read Indeed.com’s Guide to Conducting a Brand Audit

Start with a simple SWOT analysis (to establish Strengths, Weaknesses, Opportunities, and Threats) - this will help you define your offering and uncover a gap in the market where you can solve a real problem. 

Other useful exercises are:

  • Imagining a newspaper headline – what does your business look like in 5 years time? What is it about your offering that’s newsworthy?

  • Finding your ‘Why’  – see Simon Sinek video.

  1. What will it take for you to achieve this

Useful exercises

Watch Playbook UX’s video on empathy mapping

  • Roadmap – where are we now and what will it take to get to where we need to go?

2. How much investment do you need?

Useful exercises

  • Future state sales forecast based on conservative / more aggressive assumptions. Eg model potential customer base, acquisition / retention of customers, marketing spend required to achieve this

  • Consider your business model and the roles / resources required

  • Put together financial forecast combining revenue generation / cost profile of the business

  • Run a number of different cash flow scenarios – how much do you need, where / when does the cash flow go red, can you stagger investment / roadmap

3. Putting your plan into action

Whether or not you’ve secured a meeting, putting a dedicated investor deck together is essential. Use your findings from your brand audit and consumer research to populate your slides. Include:

  • An executive summary

  • Outline your vision

  • The market opportunity you’re tapping into

  • How much you are asking for, or what you are willing to exchange (usually equity, but maybe gifts / experiences depending on the business and funding sought). Check out the bids on Seedr.com’s ‘invest’ tab to see how others are doing it;

  • Your financial forecast / 5 year business performance

  • What you will do with the investment

  • The team who you have in place to run the business. Investors are buying & investing into you as the founder as much as they are the company at these early stages, plus

    recent research showed that the top 3 reasons why startups fail are: No Market Fit, Running Out of Cash, and Not the Right Team, so make sure you’re highlighting the skills within the company that show you can deliver on what you’re offering up;

  • A timeline

4. Where’s the money? 

Consider:

  • Government / small business grants - check out your local chamber of commerce to see what’s available, or a quick Google search by keyword and region will throw up any schemes in your area;

  • UK business bank loans / bank loans. If you’ve put together an investor deck, you can absolutely use this here to give them the lay of the land;

  • Family and friends loan / investment. Make sure you’re completely transparent in your dealings here, and manage expectations accordingly so relationships aren’t soured if things don’t go to plan;

  • Crowd funding (either donations or share exchange etc). Note that many of these require you to have gained a % of your investment before you go to the crowd – eg Crowdfunder, Crowdcube etc there are lots of others)

  • Private investment in exchange for equity, through platforms such as Angel Investment Network (there are lots of others).

Check out Beauhurst’s list of top angel investor networks in the UK

5. Take your time

Don’t rush the process - it is easy to get caught up in the news stories of tech startups becoming unicorn status within 5 years, the reality is that those very startups, such as Cazoo (who recently raised £640million in Feb 2022), Klarna, and WeWork, are now being hit hard

Sustainable growth, arguably, takes time and if you can learn to enjoy the process as it is now it makes it easier to do the next best thing. We highly recommend reading Oliver Burkeman’s Four Thousand Weeks

Extra resources:

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