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Get financial backing from a bank or investor

When you’re looking to foster interest from an investor or bank in your business, keep in mind that the two function arguably speak different languages. It’s therefore important to take their interests, needs, and expectations into consideration.


If you’re looking to launch a new business or even a new initiative within your business, you might need some financial backing. This is when it pays (literally) to have an investor or bank, especially if you’ve already exhausted the other options (savings, family loans, etc.).

Working with money from an investor or bank is a vastly different relationship (notably the lack of any relationship other than a business one) than you would have experienced in borrowing money from friends or family. You must convince them that there are potential earnings in it for them.

Man in a suit and tie standing in front of a building - potentially a bank

For this reason, preparation is crucial. The best way to be prepared involves one document: your business plan. Now, you can argue that a business plan is in fact comprised of many documents. And that would be true. So the more detailed information your business plan contains, the more persuasive your proposal.

Presenting a business plan that can be likened to swiss cheese (holes) will fail to attract the kind of investment into your business that you likely need. It will also cause you to come across as less professional, so it’s crucial to show up the first time with your best effort.

With that, let’s get down to business:

1. A business plan

The business plan serves as your road map. It shows where your business is going, the direction you plan to take in the future, and how you will get there. Generally, it’s comprised of three main parts:

  • What your business will sell

  • Who your business will sell it to

  • How your business will sell it

Each of these points should be developed into more detail through the following:

  • Market research. Conduct a study of your target market, focusing on potential customers and competitors. This is where you’ll need to show how your product/service is different from those already on the market. How are you going to distinguish your business from the rest?

  • A commercial strategy. This should outline how you are going to sell your product Include your marketing strategy: Traditional advertising? Content strategy online? As well as your pricing strategy, business location, distribution, etc.

  • A financial analysis. Providing detailed information about costs, budget, expected revenue, potential for return on investment, etc.

While it can be tempting to pad a business plan, it’s important that it is realistic. If you’re looking for guidelines for gauging whether your business plan is up to scratch, a SWOT analysis could be useful. It can help expose the strengths and weaknesses of your business, as well as threats and opportunities to your business. Including these in your plan will only serve to strengthen it by showing the extent of your thought process and research.

When putting together a business plan, ensure that it is clearly organised and structured. It should be clear and easy to find a certain section or topic within the business plan itself.

2. Convincing the bank or investor

Having a well-prepared business plan is certainly the first step in ensuring that your business gets backing from a bank or an investor. But presenting the business plan can be equally important. You want to be thorough but concise.

A major tip: know your audience. Take time beforehand to consider what the bank or investor will be concerned about, what they’d like to see from your business and how your business plan meets those needs. And in this case, presenting to a bank and presenting to an investor should not be handled the same way.

2.1 Getting backing from a bank

When a bank is approached about financing a business or project, their central concern is viability. In other words, how likely it is to be a success and that the funds will be returned. For this reason, the focus for your business plan presentation should be:

  • To show that your company is able to create a positive cash flow. This means that the liquidity should be clear - the bank is looking to collect on the loan based on the terms stipulated so a business generating liquidity will be reassuring.

  • To outline a coherent financing plan. In other words, if your business needs a long-term investment, you’ll apply for long-term loans. Only need short-term financing? You know where we’re going with this.

Two men in shirts and ties shaking hands over a document

2.2 Getting backing from an investor

Finding an independent investor can be a bit risky, especially if the success of your business is dependent on those funds. You’ve likely heard of money from a seemingly generous backer suddenly drying up halfway through a project. Keep this in mind and consider loans before taking this road. That said, if it is the right move for your business, keep the following in mind.

Working with an investor, whether it be through venture capital or a business angel, will be quite different from working with a bank. Primarily, where a bank is interested in seeing that your business is viable, an investor will want to see that it’s scalable. In other words, that your income grows exponentially while your expenses only linearly. We’re talking major growth.

The aim of the investor is to benefit in the short or long-term (typically short-term) from the capital they put into your business: they want to profit. With this being their end goal, approaching potential investors should differ from banks in a few key ways:

  • Your wording. Because the investor is not a bank, they don’t want to hear about ‘financing’ your business endeavours. They want to hear about how this is a good investment opportunity.

  • They look for value. Although they do eventually plan to profit from their investment in your business, they are more likely to continue with their involvement longer if they see that your business creates value in other ways. Banks will just want to see the numbers.

  • Your relationship. Be sure to define it from the beginning. Both sides should be clear on the type of investment, and what rights the investor has within the operations of the business.

  • Selling yourself. You are a major part of your business image. It’s important that you can show that you are the ideal person to take on this business or project. Be aware of your potential weaknesses and emphasise your strengths. Don’t forget to surround yourself with capable, reliable employees if you’re hiring.

  • Investing your own savings. This shows clearly to an investor that you believe strongly in the business - enough to risk your own savings. It’s a vote of confidence.

In the end, there’s no real trick to getting backing from a bank or an investor. However, there are a lot of useful resources available with tips for approaching either scenario.

Don’t forget that you will learn as you go along - that even if the first answer is a ‘No’, it will become easier to continue on to the next until you get the ‘Yes’ you need. This may provide opportunities for you to spot problem areas in your business plan and make the necessary improvements.