What are the Stages of a Funding Plan?

A funding plan is a tool that most business owners and entrepreneurs use to help them gather all the needed information about a funding source. Once the information is collected, they prepare a schedule, tasks that the employees follow to ensure they locate and secure the funds. These funds can help you implement your projects and ensure your success. If you wonder what stages are involved in a funding plan, here they are.

What is A Funding Plan?

As discussed above, a funding plan is like a tool business owners use to help them get the information they need about a funding source. Once the information is validated, you can prepare a schedule to ensure that you locate and secure the funds you need. You can use the funds to boost your business or start a new one.

The Stages of a Funding Plan

Idea Stage

The most important thing to do first is validate your business plan or idea. Then use your customer and problem hypothesis to validate that business idea. Come up with a list of all the assumptions you have, test them to see if they are right. The process of testing your hypotheses will involve interviews with your potential customers.

Proof of Concept Stage

The main point of this stage is to explore the possibility of building a product or service based on your idea. You have to come up with viable products and present them to your potential customers to get their reactions. The Minimally Viable Products you will produce will represent a semi-functional product to test your assumptions with your customers in a physical way.

Product Design Stage

This is where you design a working prototype of your product and present it to the customers. They will test its user interface, usability, and design components. Usually, multiple designs help perform testing to see which one the customers like the best. Once the design has been approved, there are two choices involved that you can pick from. First, you can license the product design to a particular business to finish the product development. Once they do that, they will then manufacture the product and distribute it to the market. The other choice is to move to the product development stage do the marketing yourself.

Product Development

In the product development stage, business analysis is completed, and the product’s final design is made. Once the final design is ready, you can do a few things: define pricing, create marketing materials, handle any training programs and product documentation. At the end of product development, your product will be ready to market.

Manufacturing and Distribution

Most business owners at this stage take the initiative to sign their product idea to a manufacturer then come up with capital for manufacturing and distribution. Most businesses at this stage may choose to manufacture and distribute their products themselves. This is the priciest stage of the funding plan. However, working with manufacturers with distribution channels and existing manufacturing capabilities gives you more advantages.

A funding plan is essential for any business; once your business reaches the final stage, you can get sales revenue. More options become possible and available to your business, for example, debt financing.

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