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As you try to develop your business and what you offer, be it product or service, you’ll find yourself needing funds and resources to pursue your ideas. While you may rely on friends and family in the early stage, your business is going to need a more stable ground as it develops.
Funding, while it isn’t part of the purely creative and technical process of building a business, is a very important aspect of entrepreneurship as it can make or break your idea. We're hoping this article helps you find ways you can raise $$$!
A funding strategy is a written and agreed plan that determines the financial state and future of an organization over a given period of time, generally 3-5 years. This document should detail how you plan on acquiring those funds and resources in order to carry your business objectives.
A funding plan should be down-to-earth and practical, understood by everyone, your staff, fundraisers, and board members. Your strategy should also be based on a long-term action plan and adhere to your goals, timescales, and resource requirements described in it.
Let’s look at the reasons why you should consider a funding strategy:
A funding strategy has various goals, the main one is of course to bring money to the company from the already existing funders and other sources of income. The secondary goal is to bring money from new funders and new sources.
As your project grows, your funding needs aren’t punctual but rather grow with time. An efficient funding strategy will bring you continued funding for your existing and developing projects. Knowing you have a detailed and actionable plan of action to acquire funds will ease you and allow the rest of the team to focus on developing their part of the project.
As you diversify your income streams, your business will grow more secure and resilient. This will demonstrate to potential funders that your business has carefully thought through the different steps of securing funding for the work it aims to do in the future.
Finally, detailing how your strategy will play out and how things will play out ensures that everything runs smoothly in your organization. This will help you prioritize tasks and avoid wasting time and resources.
Upon writing and thinking through your funding strategy, you will need to consider 6 questions:
What are we going to do? This step aims at describing what makes your project unique, why should it be funded and what you’re trying to achieve. Find out who is doing similar work and consider whether or not it would be possible to conduct a partnership to combine efforts and resources.
Why are we doing it? Make sure there is a real need for your project and show its potential to funders. Who will benefit from your idea and what would happen if you didn’t exist and your project never saw the light of day?
Who will do it? Decide who is responsible for fundraising and what structure you want to use. Are their volunteers, staff members etc.?
Where will we do it? Consider the location of your project, the area that you will cover and the people you are trying to reach. Are you considering an affluent area or perhaps an area where the population is shifting. These will greatly affect your strategy as your target audience depends entirely on the are you target.
How will we do it? Determine the methods you’ll use and the resources needed to carry your fundraiser effectively, think about staff, volunteers etc. Don’t hesitate to list the items you need. Once you know how much your organization needs, think in terms of BITS;
Make sure to diversify your income streams as much as possible, otherwise if your main source of income comes to disappear you’ll have big problems.
When will we do it? Prepare a time scale or ongoing plan and think about the steps necessary to maintain current funding as well as securing future funding. Know your deadlines for funding applications. Create a schedule for when you apply and when the funding will arrive.
This plan of action should answer 4 questions:
In this part, plan out the monetary terms of your organization for the next year. This will help you set targets and allocate resources. Find the gaps and financial problems in your plan.
As your project grows, you will need to reevaluate your plan, make sure you review it on a regular basis to ensure it is realistic and accurate. This Budget should come right after the action plan.
If you apply for a fixed-term fund, you also need to prepare how your organization will stop being dependant on that funding in three years. Are you going to find new sources of income ? Is another organization or local authority going to take over your project ? Are you going to start generating revenue?
As you develop a project, it’s extremely important to plan out what you want to do and what resources you’ll need to make that happen. Your funding strategy is one of the most important documents of your organization, make sure you review it frequently and make changes depending on the status of your business.