Finding funding – one of the most important aspects of your business, but definitely not the smoothest or easiest. Even if the company is making a profit it still needs funding because as you know, profit and cashflow are not synonymous. When you have a business plan down and you’re ready to start pitching to investors, try to keep these tips in mind to help steer you in the right direction and find funding for your business.
Network Network Network
We all know the saying “It’s not what you know, it’s who you know,” and the rule applies even when trying to obtain funding. Professional networking can be vital to the growth of your business and can help you obtain the funds needed for your venture. According to Forbes , networking is vital to entrepreneurial success for about 78% of startups. Sometimes it takes a couple of interactions to clearly paint the idea of your company in the heads of investors, so having that rapport with them can be extremely beneficial. Along with building your own case through networking, you can gather some valuable advice from investors you come into contact with. Picking the mind of investors can enhance your pitching skills and can be the difference between getting the funding or not.
Ask for the right amount of money
You might think that asking for as much money as possible is the right way to go, but going overboard might make the investors raise a weary eyebrow. If the initial price seems unreasonable they might just decide not to invest at all. At the same time, you don’t want to ask for too little in case they are the only investors interested. Then you have significantly less than you need and the company falls flat. The best way to prepare for this is to create a budget for your business proposal before pitching to investors. Creating an effective budget and financial plan will give you a fairly accurate figure for what your company will be needing when looking at initial or further investment. Here is how early stage investors review your financial plan.
Have a profitable idea
A study shows that 42 percent of startups fail and the main contributor to that is lack of sales or profit. As obvious as it may seem, you have to have an amazing and salable idea to get adequate funding. Even if you have a great relationship with an investor, investing in companies is still their job and how they earn their livelihood. They want a return on their investment so having a profitable idea as well as a great pitch is extremely important when trying to secure funding.
Exhaust all your resources
There isn’t only one way of raising funds for your entrepreneurial venture, so you shouldn’t only look in one place for it. Angel investors, VC’s, product pre-sales and government grants are just some of the ways you can secure funding for your business. If one avenue doesn’t seem to work out or you get significantly less than what you need, don’t give up. Get a larger retainer for the service, have an offer for pre-sale orders, check for business pitch competitions. Check out this list of a couple of different ways to come up with sufficient funds to run your business but it might take some time, hard work and a sprinkle of creativity.
Practice your pitch
Does practice make perfect? Maybe not, but practice does make better. Perfecting your business plan and practicing your pitch will better prepare you for when you are in the face of actual investors. If you are tripping over your words, have inaccurate figures and not clearly painting the picture of your business,then they might not be willing to invest. If you personally know investors, practice your pitch with them and take their feedback into account when pitching it again. You will probably never have the perfect pitch so it’s important to get as much critique as possible and learn from those mistakes. Donna Griffit, the Co-Founder of Invisu.me said in this interview that once you have found the perfect for what you are trying to build, do not pitch to them. She advises that because the first few times you give your pitch it will probably be rough. You don’t want to discover holes in your pitch right in the middle of pitching your dream idea to the perfect investors.
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