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Five Steps to Help SMEs Secure Funding

Rayhan Aleem, founder of Alpha Pro Partners, explores how to get your finances in the best shape to attract investment

As the lifeblood of the global economy, small businesses need the proper support not just to survive but to thrive. Whatever stage you’re at as an SME, whether that’s planning for expansion or launching an innovative idea, adequate access to finance is going to be crucial. Some of the reasons you might require capital include diversification, product development, marketing, resourcing, digital investment, or office costs; without a cash injection, it can be extremely difficult to reach your potential. In the UAE, the government has introduced various initiatives designed to help tackle the problem; however, the key is taking the right actions to increase your chances of success.

According to Rayhan Aleem, founder of Alpha Pro Partners: “Most businesses will need access to finance throughout their journey, and facing repeated barriers can be a real blow. Raising finance can be challenging, but the good news is we’re seeing many more avenues opening up for SMEs, and it’s certainly not an impossible task. It’s more about understanding how to reduce the funding gap, minimise perceived risk, and position your business as a lucrative prospect.”

Five main areas to consider are:

  1. Get your numbers straight

First and foremost, before looking for investment, have a clear picture of your numbers. Investors will never trust you to deliver returns unless you understand the financials inside out, plus you won’t know how much money to ask for. It starts with monitoring the key financial KPIs monthly, then using that data to create realistic cashflow projections, anticipate growth, and analyse how long you can stay afloat. Once you’re in front of an investor, be armed with all the relevant information, ready to justify what you need and where it will be spent.

  1. Leave time to prepare

Like any other part of your business strategy, securing equity funding is a process that requires sufficient planning. Timelines vary depending on the source, but it can take several months. Too often, people start looking for capital when the clock is already ticking. The last thing you want is to appear desperate, so make sure you give yourself enough time and support to do it right. A good indication that you’re ready to make the leap is when you can show sustained revenue growth month-on-month over a significant period e.g. year-on-year.

  1. Validate your business idea

A successful business depends on having a solid business model that you’re able to validate. As a start-up, you’ll need to make sure that there’s real-world demand for what you’re offering. Similarly, if you’re planning to bring new products to the market or branch out into different areas, you’ll be expected to confirm assumptions around market fit and the size of the opportunity. Where the investment is being used to grow the company, investors will also want to see a concrete strategy showing how you plan to scale up (with an awareness of how that will impact future costs).

  1. Develop a winning pitch

There’s a small pool of investors compared to the number of entrepreneurs seeking capital, and it’s your job to show them why you’re the best choice with an effective pitch. Hard data and tangible ROI will a big part of the decision-making process but a compelling narrative is also essential. By communicating the story behind your business with passion, you can convey the commitment you feel to its success. Keep the pitch deck concise, aiming for a presentation of around  20 minutes, and incorporate strong branding to ensure it looks professional.

  1. Do your research

With so many different types of funding available, it’s important to find the source, or combination of sources, that fits your business and suits your situation. That means being clear about your needs and researching the various possibilities in the context of your goals. Depending on whether you’re looking for seed capital, growth capital, or expansion capital, you can explore private investment (e.g. angel investors, VCs and PE firms), UAE government programmes, business incubators, and peer-to-peer lending platforms. When it comes to business loans, they’re traditionally much harder for SMEs to receive, although more banks are starting to develop specific products for entrepreneurs and small business owners.

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