Assumptions are a great thing. They save time and energy and help us get through our days with less hassle. However, our assumptions are not always correct. We’ve all met people who believe that they can fly, or that the moon landing was faked (or both). These are things that we call ‘myths’ – things that we believe to be true but haven’t checked the validity thereof.
Funding myths are the biggest fear of any startup or small business owner. However, funding myths are what you make of them. You can either let them control and cripple your business or you can learn to use them to your advantage. By understanding these common funding myths, you can create a unique strategy tailored to your needs and truly unlock the power of funding myths.
There’s a lot of talk about the importance of funding in the startup world. If you want to take your idea and turn it into the next Uber or Airbnb, you need to have funding. After all, if you don’t have money, how are you going to grow your business? Truth is, there are a lot of myths about funding floating around out there.
In this article, we’ll take a brief look at some common funding myths and bust them so you can feel more confident about your company’s prospects for growth.
Myth #1.
BUSTED!
Before getting funding for your business, you DON’T need to have a financial track record, you don’t need to have a certain amount of money in the bank, you don’t need to show previous successful transactions. You do need to be credible and have a strong and viable transaction or deal. The Funder needs to be able to trust you with the repayment.
But how do you build that track record if you’re a new business? With ProfitShare Partners we give you the capital to create that track record – we do not focus on your balance sheet or financials, we focus on the underlying transaction.
Myth #2.
BUSTED!
A lot of business owners think that you can’t get any funding for a small business. While it is still difficult to raise funding from traditional funders like banks, there are now many other alternative funders out there offering a range of new and sometimes groundbreaking funding products. Alternative funding options could be a great way to get funding for your business.
Our brand purpose is to empower small businesses and we do that by providing capital to grow their businesses until they are “bankable.” As long as you can prove that you have a credible contract or order, you have credible clients and a feasible financial model. Your plan needs to show us that you have factored in all costs and that you can execute the transaction profitably and ensure that our funds are protected in the transaction.
Myth #3.
BUSTED!
Alternative Funders use new technology and methodologies which look at risks differently from traditional funders, making capital raising a lot easier for your business. In fact, Alternative Funders have lent out billions of rands in the last few years to businesses that could not access this funding from traditional funders. These Alternative Funders can be your stepping stone to traditional finance and can help you build your turnover and credibility and business experience.
Over the past few years, there have been several credible players that have entered the market. If you’re worried about any of the Alternative Funders, do your research on them – you can’t paint everyone with the same brush. There are roses amongst thorns. There are many good operators and some of them have the backing of larger organisations such as banks. ProfitShare Partners is one of the credible Alternative Funders that provide small businesses with capital to grow their businesses, and therefore you can undoubtedly trust us with your funding needs.
Myth #4.
BUSTED
It’s important to remember that there are many ways to fund a Purchase Order that doesn’t involve using your savings. You can still use your savings to fund your Purchase Orders as it will be the most cost-effective way however you shouldn’t just limit the level of your business to the level of your savings. We would recommend that you use other people’s money to fund the Purchase Order and keep your savings to fund things that cannot be funded or keep it for unexpected or unforeseen expenses. If you can do this, you can grow your business faster because you won’t be limiting yourself to only your savings.
If you are a business and are looking for funding, we can help you get the funding you need without giving up a share of your company. We simply take an agreed share of the profit per transaction that we agree on at the beginning of the transaction. Our business model is based on a profit share approach (thus the name of our company :-D) where we take an agreed share of the profit for that transaction.
Myth #5.
BUSTED!
Not with ProfitShare Partners. We work on a profit-sharing model where we take a share of the profit per transaction. At the beginning of the transaction, we agree on what that percentage will be. We have the funding to help your business grow, but unlike traditional investors, we do not ask for a share of your company, only an agreed share of the profit.
Myth #6.
BUSTED!
We do not charge interest on the money that you borrow. Instead, we take an agreed share of the profit from your business each time you have an order. This means that although there are no interest charges, we take the risk with you and our return is based on the profit of your transaction.
Myth #7.
BUSTED!
People often don’t think that they have enough capital to go after the big orders because they only have a small amount of operating capital, and they don’t want to lose their credibility by taking an order which they cannot deliver on. This is where we come in as we provide you with the capital to support a big order that you couldn’t ordinarily fund yourself. Don’t limit yourself by only bidding for small orders. We can help your business grow so if you get those big orders, we can back you up with the capital to fund and fulfil the order.
Myth #8.
BUSTED!
There is a stigma around borrowing capital for your business. People are under the impression that it makes you look weak to your clients by telling them that you are using funding. In fact, your clients are most likely using banks and other funders themselves. Also by only paying you in 30 or 60 days, you are actually funding them! So we’re here to tell you that it’s a myth. It makes you look like any smart business entrepreneur who is trying to grow their business. It’s about how you communicate this to your clients.
If you need money to grow your business, there is nothing to be ashamed about. Clients understand that if you need to grow your business you need to raise some kind of capital or debt, and if you’re using good debt to grow your business, then there is no reason for anyone to think that your business is weak.
Myth #9.
BUSTED!
Funding is not only for big businesses. No matter the size of your business, you can access funding if you have a credible transaction, a company with integrity, and prove that you can pay back the money that you’re borrowing and that you can execute on the underlying transaction.
Funders like ProfitShare Partners can help you access capital – no matter the size of your business. In fact, it used to be true that funding was more easily available to big businesses, but nowadays, thanks to the variety of funding sources out there, even startups and small businesses can get funding.
Myth #10.
BUSTED!
Don’t believe that at all! It might be hard to scale a small business, but it’s not impossible.
Most of the clients in the ProfitShare Partners stable have increased their turnover by 1000% in just 12 months, so if you have the transaction we have the cash to back you up and actually help you scale your business very quickly.
Today we’ve busted a few common myths that are holding people back from starting their own businesses or growing their businesses and hopefully, we’ve given you some new information to help you along your journey towards your goals. We’re hoping you’ve learnt a few things from this article and we trust that you’ll share them with other business owners. The more we all know and share, the better we’ll become as business owners.
#FUNDINGMYTHSBUSTED
If you’re ready to try out alternative funding, then head on to our website and try our easy and simple application process.
