Financing a business is something that challenges every entrepreneur, especially during these tough economic times. In many instances, in order to generate growth, entrepreneurs must take advantage of external funding opportunities because of the need to purchase new equipment or machinery, finance new property, invest in innovations in technology, or maintain current levels of cash flow when rolling out new products and/or services. 

Because external financing can often be expensive for entrepreneurs, it takes some financial forecasting to understand the right time to make a move. Here are some tips for entrepreneurs to maximize profitability when turning to external financing.

Forecast for a year or two down the road
Entrepreneurs crafting their business plans should understand when they will need external financing at least a year in advance. By using business planning software, entrepreneurs will be able to plug in the numbers to get a better idea for how their finances will look down the road. Understanding when finances are needed in advance will also allow entrepreneurs to create a strong application for funding opportunities when reaching out to investors. By getting an idea for available cash flow six months to a year down the road, entrepreneurs will be able to look into the future to see what their financial situation will look like.

Don't be shy during negotiations 
Many aspiring business owners have done it. They've underestimated the amount of money they need to get their firm off the ground or lacked the foresight to make the right decisions on orders. While these gaffes are common, it is important for entrepreneurs to learn from their mistakes and apply these lessons in the future. When asking for funding from investors, entrepreneurs shouldn't be tentative or modest, they should actually ask for more money than they think they will need because it is much more cost efficient to process one application for lending, than two or more. By requesting a slightly larger amount of money than they may need, entrepreneurs may also be able to signal to investors that they feel good about their business and that they are ready for success in the future.

Engage multiple investment opportunities
Entrepreneurs can gain leverage with prospective investors when they get multiple potential funding sources in the mix. In this scenario, up-and-coming small business owners will get lenders to bid for their business, which means interest rates can be lowered and maybe even application fees can be waived. Creating a competition with investors can also show potential lenders that the financing opportunity is less risky, making an entrepreneur's firm more attractive for lending opportunities down the road. Entrepreneurs who are able to get potential investors  in a bidding war for their business may get a better deal and be able to use that fact as a negotiating tactic during future investment conversations.

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