Understanding Project Fundraising

Its important to note that no matter what stage your project is in, you’re probably going to need some investment in expansion and you may require project fundraising. A number of these issues are around the pitch and business plan may be developed for the project fundraising.

Most project owners have a project plan and a budget for their project but yet to figure out how to get the funds to actually put the project in action. This is where project fundraising may come to play.

We would start by discussing the  business plan issues for smoother sailing project fundraising campaign when trying to secure funding from an investor like me and others.

The Benefits of a Well-prepared Project Business Plan

A business plan will provide you with a clear strategy and objectives. A good project business plan will give you direction and keep you and your staffs focused. In writing your business plans, you may make mistakes that can be corrected on paper prior to implementing your plans, which can save you money. This article by Forbes Magazine discuses the fact that No matter how great your product or business idea, how lean you can operate, and how big you’ve grown already, more capital and financial leverage will almost inevitably be a necessity.

The project business plan demonstrates the seriousness of your intentions to banks, investors, colleagues and employees. It can be used as a measure for you to foresee/anticipate problems and take appropriate action timeously. All your ideas can be incorporated into the business plan to become a reality. The planning process affords you the opportunity of adopting a step-by-step approach in preparing for the future achievement and risks of your business venture. At the end of the process, you should be confident that the plan will work.

A good project business plan involves research on the external and internal business environment like competitors, suppliers, consumers, etc., which can be translated into a detailed action plan showing the areas of competitive advantage and how you will combat these problems. You can use the business plan to identify opportunities, analyse the life cycle of the business and each activity in the business and plan for capital requirements.

Milestones with time-frames can assist the business in achieving its objectives within the stipulated schedules.

Reasons for not Being Able to Secure Investors for your Project Fundraising

The reasons mentioned down below are just a few and are not limited to these only:

1.   Management Reasons:

• A poor management team with insufficient experience and/or the wrong skills mix for the needs of the project would affect the Project Fundraising.
• A narrow customer base and inadequate marketing skills.
• Owner/managers who are autocratic, inflexible and make strategic decisions based on emotions.
• A weak business concept, in that the product/market mix is not clearly defined and developed.
• A failure to identify and manage risks would surely affect the project fundraising.

2.   Financial factors

• Project companies without proper record/account of the financial transactions of the project.
• Insufficient information on the financial performance required for basic decision making.
• Financial information based on incomplete or inferior technologies.
• Insufficient supporting evidence on the financial track record to obtain additional funds/loans.
• Poor management of accounts payable and receivable.

• Poor forecasting and management of sales and cash flow.

• Insufficient working capital to fund its operations.
• The business has borrowed too much money in relation to the owner’s investment in the business (high debt/equity ratio).

3.   Cash flow Projections

Most prospective entrepreneurs focus mainly on the infrastructure that is required and ignore the cash flow which is critical to the daily operations of the business. Cash flow assists in managing your financial resources,i.e. debtors and creditors control. This is an essential factor that you must be consider in your project fundraising.

4.   A vague Project business plan

Prospective entrepreneurs or writers of business plans make an assumption that the reader/funding institution/investor knows what the business venture is all about. Therefore, it is important to provide as much detail as possible and elaborate wherever necessary to clarify the needs of the business.

5.  Unrealistic assumptions

Almost all writers of business plans assume that the business will succeed, hence they make unrealistic assumptions. It is advisable to benchmark against existing or similar businesses in the industry for acceptable standards. The goals of the business must be realistic and achievable. Rather start small and then expand.

6. Risks

Many business plans ignore the risks or do not make provision for the risks. It is critical that the business plan should include all risks and provide information on how some of those risks can be mitigated.

7. Competition

Many prospective entrepreneurs ignore incorporating information on competitors, either through their lack of knowledge of them or they are not aware of the significance of competitors to their business. It is, therefore, imperative, as a new or existing business, that you are aware of the competition and that you accentuate your competitive advantages in your project business plan.

8. Suppliers

Suppliers’ play a critical role in your project fundraising. It is important to know who and where your suppliers are as they contribute to the effective and efficient running of your business. Inconsistent and lack of the necessary inputs from suppliers will impact negatively on production and could result in non-delivery of products to the market. Hence building and strengthening

How Brickstone Can Help?

Brickstone is an Infrastructure Accelerator with strong competencies in the Appraisal, Transaction Advisory and Project Development of large scale industrial and infrastructure projects in Africa. In executing our advisory process, Brickstone combines investment acceleration, capacity building and hands-on advisory skills. This is to navigate the complex structures which describe today’s financial markets; and an unsurpassed creative approach that differs from the traditional consulting firm