Recent research from Crowdfunders shows that in some sense nothing has changed when you are looking to start a business – it is either to put your hand in your own pocket or rely on the banks. This gives the impression to people looking to become a entrepreneur need to be rich or well-connected.
Before bashing the banks it is worthwhile understanding a little about their predicament – computerisation has made the mainstream funding for new businesses more predictable so that bankers do not show bias towards people who reflect their own belief system, but also more constrained.
The difficulty is to do with segmentation which still focuses on demographic information rather than other aspects that research has shown to be more influential. Research from the then Department of Business Innovation and skills showed the most successful businesses and the ones least likely to fail are those with ambitious business owners, as an business owner can relate this energy is needed to create momentum and help overcome adversity.
Business plans have become in the last few decades but there is still a need to improve them. This is not in terms of structure but in terms of realism, the biggest concern for a business is getting the sales needed to make the business viable so understanding their customers, how to contact them and what their competitive advantage is.
A start up expert once told me that the biggest problem with business plans was not understanding the operational costs of starting up – most individuals have a clear idea of this, particularly if they have worked for someone else doing this, but too few businesses have a realistic sales and marketing budget.
This can be done by following the roadmap so that you create your own marketing strategy or if you want independent scrutiny and expertise, then please get in touch and you may benefit from our start up market research solutions.
Banks do need to improve the finance to start up businesses, but new businesses are a high risk proposition for banks or any lending provider and their funding model has had to change as a result of the credit crunch so business plans have to be better and give them the confidence that you can create a competitive business.