Becoming a successful entrepreneur is no small task. There are lots of things to learn, both about running a business, but also about yourself.
However, don’t let the challenge discourage you. Starting a business and sticking with it will likely be one of the most rewarding things you ever do.
But before you can make your business a success, you need to get it off the ground. For most people, at least those of us who don’t have large inheritances or wealthy relatives, this means finding people, usually complete strangers, to invest in your business.
If this terrifies you, don’t worry, you’re not alone. But take solace in the fact that it’s not as scary as it seems. There are more ways to get funding then going on Shark Tank, although this could work if you use the right strategy for securing a deal.
But there is still a learning curve, but we’re going to do the best we can to try and make it a bit smaller. Here are some things you should keep in mind before going after funding:
Decide Exactly How Much You Need
The first thing you should do when trying to secure funding is come up with a specific amount of money you need.
This is good because it will help show to investors that you’ve thought out your request. But perhaps more importantly, it shows you’ve thought about how you’re going to use the money, which will be of utmost importance to any investor.
Think about it. Every business owner knows they need money to get started, but if you go in their asking for cash to pay employees and keep things afloat, no one is going to be jumping to fund you.
However, if you enter a room full of investors and say you need, as an example, $200,000 to ramp up production and market to a new audience that has shown interest in your product, then you’re far more likely to get people’s attention.
Asking for funding is no small thing, so make sure you know exactly how much you need and what you’re going to do with the money once you get it.
Emphasize Value, Not Features
A successful business is one that sells something that people genuinely need, or at least feel they need; the concept of a “need” is rather relative.
As a result, when you start trying for funding, make sure you’ve spent a good deal of time figuring out what need you help people satisfy.
Just because your product looks good or is fun doesn’t mean it adds value. These are features, and they do not make you unique.
Think critically about how you improve people’s lives, and make sure to emphasize this wherever you deal with a potential investor.
Determine and Explain the Return
Investors are looking for opportunities to make money. It’s as simple as that. As a result, you need to explicitly state how people are going to earn that money.
Are you asking for a loan, which means people will get their money back through interest? Or are you offering a stake in your company?
This second option tends to be a popular choice, as it gives investors a bit more security. It also gives them a say in what happens at the company, something that adds another level of security.
It’s important to remember this whenever you’re pitching, no matter if you’re asking for a low-interest loan from your parents or offering shares to a group of venture capitalists.
Make sure people know how they will make money, and if you can, try to estimate how much. This plays to humans’ tendency to think about themselves, and it will increase your chances of getting money for your project.
Have and Use Proof
Don’t be surprised if people ask you to back up any claims you’re making with some tangible proof. Most people with an idea for a business believe it’s going to work, but not everyone is right, so can you blame someone for asking for proof?
Before you go out and start looking for people to help you get your project started, make sure to spend some time collecting evidence that your idea works.
This could be something as simple as a thorough thought exercise that’s backed up by interviews conducted with potential customers. Or, it could be results from a pop-up store.
But no matter what it is, the more proof you can offer that your business has a chance to work, the more likely you are to get funding.
If you don’t have this proof, start collecting it. Then start contacting investors. Not only will it give you the opportunity to prove to yourself that your idea is good, but it will also significantly improve your chances of securing funding from investors.
Assemble a Team
Anyone with experience starting and running a business knows that you can’t possible do it on your own.
As a result, most investors will want to see the team you have around you to help you run the business.
For this, make sure to focus on what’s best for the business. It’s normal to look first to those in your circle, but friends don’t always make good business partners, especially if they don’t have the right qualifications.
In fact, it’s often better if you find someone who is outside of this circle. It’s easier to put emotions aside when there isn’t a personal relationship, and this is absolutely necessary when dealing with a business.
If you’re moving towards trying to get funding, make sure you’ve put together a team of people that will help the business, as this will dramatically improve your chances at securing funding.
Persevere and Persist
These tips will help make the pitching process much less terrifying. But we’d be lying if we said this is a guarantee. It’s a dog eat dog world out there, and you will face some rejection, especially as you first start out.
However, don’t let this get you down. Believe in your idea and in yourself, and before you know it you will find someone to help you turn your idea into something real.