Some say money makes the world go ’round. While others might debate the validity of that particular adage, small business owners are reporting that a lack of access to it is, at the very least, affecting their ability to grow their ventures.
According to a survey conducted by Palo Alto Software – a maker of digital small business tools – a 41-percent majority of small business owners named funding as their biggest challenge. Difficulties with raising capital were named more frequently as primary issues by the 400 small business owners polled on the matter than both the Affordable Care Act and tax reforms.
“Small businesses are the driving factor behind economic growth in the United States,” Sabrina Parsons, CEO of Palo Alto Software, was quoted as saying in a press release on the survey’s findings. “They’re resilient to most challenges that come their way, but without that access to cash via loans and credit lines, it’s difficult for them to grow and create jobs.”
The survey also revealed that new startups were especially plagued by money woes – 45 percent of new entrepreneurs said that a lack of funding has negatively impacted their growth potential. Additionally, 40 percent said that raising more money is among their top three goals for their businesses.
Other studies have shown that women business owners in particular have difficulties raising capital for their ventures, with investors demonstrating noticeable preferences for male entrepreneurs.
For those who are just starting out on the path to entrepreneurship, there are multiple options for fundraising outside the realm of pitching to venture capitalists, including involvement in incubators, crowdfunding and business loans.
If the pitch route is an option you wish to pursue, however, those who coordinated the survey recommended learning as much as possible about the fiscal needs of your business before doing so. Of the entrepreneurs polled, 80 percent said they develop their own budgets and sales forecasts, while only around 50 percent expressed confidence in those numbers.
“Its difficult to impress an investor or loan officer without a solid financial plan in place,” Parsons noted. “The best way to secure venture funding is by presenting a confident plan, at the right time, for your business’ financial future.”