Raising money to start a business takes more than just a good idea. Lenders – banks, venture capitalists, angel investors and others – consider many other things in deciding to financially support a company, especially a startup. In this blog post you can find ideas to help present yourself as a fundable entrepreneur.
Demonstrate focus and market potential.
A common entrepreneurial mistake is failing to accurately identify the relevance and value of the products and services your business will offer. Does your product fill a need or solve a real problem? Is it equal to or better than available competitor options? Does it have added features/benefits? Is it new technology? Who will buy from you and why? How do you stack up to competition?
It’s important for investors and lenders to see you have clear focus and understand the marketing potential and challenges of your business idea. How will you differentiate your business and products? Before you do the paperwork to organize a new business entity, ensure your business ideas have clear focus – and viable market potential.
Don’t go at it alone.
Few people possess all the skills and energy needed to build a successful business entirely on their own. A solid team of experts will have more credibility with investors than a great idea alone. Specialize in technology? Find a co-founder with production, finance or marketing skills. Match management experience with demonstrated sales ability. Seek outside experts like accountants and attorneys; consider creating an active company advisory board.
Lenders and investors need assurance a company will be well managed regardless of the business concept.
Develop an elevator pitch.
Lengthy presentations stuffed with industry jargon quickly turn off the money faucets. Creating a short sales pitch to convey your business idea quickly and succinctly will create investor confidence – and likely product sales!
A business plan is a MUST!
Entrepreneurs often put little effort into a written business plan; but it’s not a high school term paper. Clearly developing your business ideas and organizational structure in an investor-friendly written format is vital to obtaining funding capital and loans.
Start with a mission statement and include start-up costs, ongoing needs and future projections. Outlining plans to mitigate risks and compete in your market will increase your ability to obtain needed financing.
Writing a plan also greatly improves the odds of achieving your business goals, realizing profitability and a positive ROI. That’s the beauty of an entrepreneurial business plan.
Be organized and prepared.
Financial documents are also a must for lenders/investors to review, so present crucial details in an organized fashion.
You need working capital; how much and when? Will you buy or rent? Highlight the amount and types of funding needed with anticipated sources, uses and resulting cash flows. If you need equipment, include a detailed listing with prices.
Be sure to research and present industry information and trends along with company specific exhibits. Include balance sheets, income statements, and tax returns to support your business financing needs. Tie repayment to the life of the assets and type of entity.
Refine the written plan by asking a mentor with business expertise to review it, ask questions, and give you input prior to presenting it to lenders and investors.
Have a timeline in place.
Investors need to know how quickly the idea will be executed. Prepare a realistic timeline to launch your business; plan to move quickly as long start-up periods may increase costs and decrease investor confidence.
Is your business idea fundable?
Success in obtaining new business funding is ultimately about investor confidence in the entrepreneur – so back your entrepreneurial idea with a well-researched and viable business plan. Master the points covered above and you’ll be ready to pitch your idea to investors or lenders and well on your way as a successful business owner. Good Luck!
The commercial bankers at MidWestOne are there to help you and your business succeed. Make sure you are taking advantage of their business expertise to help you achieve your business goals. Reach out to them today.