Finding investment for your business can be a very confusing process. If you’ve never gone through it before, knowing where to start will be a challenge, and people will often get ahead of themselves, ultimately making it harder for themselves in the long run. Before you can expect other people to put money into your venture, you need to make sure that you have everything in place for it to be a success.
To help you out with this, this post will be exploring some of the work which has to be done during this process, giving you the chance to avoid going too fast or asking for too much when you’re looking for funding.
Get things in order
There are very few investors out there who will be willing to part with their money until you have everything in the right place within your business. If you find someone who is happy to give you something before this point, they probably aren’t the best to go with, as they don’t have much business sense. A big part of this is your plan, and information about this can be found in greater detail in the next section. Along with this, though, you will also need to consider several other areas which will need to be in good shape before you push for someone else’s money.
- Accounting: Money is a big part of this whole process, and you will have to make sure that you’re working hard on this from the very start. Any debt you have should be on its way to being cleared, while areas like taxes should also be up to date, ensuring that all of your investor’s money will be going to the right parts of the company. When you don’t have this ironed out, most investors will be concerned that their money is to simply fill a gap, and this is certainly not the kind of feeling you want to inspire.
- Compliance: Breaking the law is always serious in business, even if the rules which are being broken seem fairly small. Areas like data protection, employee welfare, and anything else which can impact your company’s reputation need to be covered before you can expect someone to invest in you. A good investor will always work hard to make sure that they aren’t going to get dragged into these sorts of issues. This could mean getting the help of a lawyer, but will be worth it in the end.
- Organisation: It’s easy to start a business based on handshake agreements and promises to your early partners, but this will soon have to change once you’re looking for an investment. You will need to have the company split up properly, showing the investor that their equity is properly secured. Along with this, though, you should also work to make sure that contracts are solid, people know how much they have to work, and that your company is organised enough to make money.
Make a plan
Once you have things in order, it will be time to start developing a plan, and this has to be more than ideas in your mind. When you are promising someone that you will be able to make money for them, they will want to know exactly how you plan to do it. While it can be easy to get by without any sort of idea of what needs to be done when you’re first getting started, this will make it very hard once you start to grow and take on new clients. Below, you can find some of the elements which will need to go into the plan you build.
- Research: A good business plan always starts with some research. You need to have a good understanding of the market, your competitors, and the work you will have to do to get started before you can start laying out your ideas, as this will make the process of figuring out what you need to do much easier. A gym business plan, for example, will often include information regarding machinery and purchases, along with details surrounding the current state of the industry. This gives you the chance to show your investors where your money will come from.
- Growth: You won’t be able to go very far with your venture unless you plan for how it will be growing, especially if you’re working in a competitive field. Setting targets is very important, but you also need to think realistically about how you will be getting new customers through the door, and this should all be covered. Some businesses decide to stay online, using their website and other platforms to push their growth. In other cases, though, the main objective will be to open a physical store.
- Marketing: It can be hard to know how you’re going to sell yourself when you first get started. Of course, this is often the area which an investor will be able to help you with the most, but it will still be worth thinking about the work which you will have to put into it. Companies which ignore this area don’t often get very far, especially if they are seeking money from others to help them along the way. If you need help with your marketing, you shouldn’t have too much trouble, as there are loads of companies out there which can handle this area on your behalf.
- Projections: The most important part of your plan is the projections you come up with to show how you expect your business to shape up financially once an investment is made. You need to make sure that you know how much you have the potential to make, how long it will take to do it, and how much of this money will be going back to your investor once all is said and done. This part of your plan is crucial, and it will be worth getting some help with it to make sure that you’re planning it accurately.
Develop a proposal
With your plans in place, you will finally be ready to start thinking about how you will use it to win over an investor, and this will mean developing a proposal. This is an essential part of the process, and is something which most businesses have to go through at some point in their life, making it easy to find resources around the web to help you out. In essence, this will be a sales strategy which is designed to show people exactly what you’re worth, before you’re actually worth anything.
To have success with this, your proposal needs to include several fundamental pieces of information. If you have a website and marketing materials already lined up, these will form a big part of it, making it easier to sell your work. For those that don’t, you will have to figure out how you’re going to get these pieces together once you have some money behind you. Along with this, it will also help if you already have some customers or a portfolio which can be shown off. This doesn’t work for every type of business, but will give you the chance to show your worth from the very start if you’re able to put it together.
Finally, as the last part of your proposal, it’s time to think about money again. Having your projections down on paper is all well and good, but you will be expected to demonstrate a strong understanding of the figures you’ve come up with during a proposal, and this is where a lot of startups will fail. It will be very hard for an investor to feel comfortable with giving you their money if they don’t think that you will be able to make it back. So, when it comes to the proposal, you will have to show them exactly how you plan to generate their return.
Winning the pitch
Once you have everything organised, you will ready to go out and start pitching your business to potential investors. A large part of this job revolves around confidence, but you have to be aware that it might not work out with the first couple of meetings, and can’t let this knock your spirit or make you feel like there isn’t any point. Winning pitches always come from business owners who have a lot of faith in their idea. Other people won’t share this belief, and this means that you will have to convince them that you’re going to make money. With so many businesses failing, this isn’t an easy task, making it well worth getting plenty of practice in before you start.
With all of this in mind, you should be feeling ready to get started on your own business. Doing all of this work will be well worth it once you’ve got some money behind you, with this resource making it much easier to push your company in the right direction. Of course, though, once you have it, you have to take things seriously, as it won’t just be you and your partners relying on the business succeeding anymore.