by Sheila Elliott,
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UNITED STATES, Mar 06 — This is part one of my tips for funding a business successfully. A business can raise finance from personal savings, grant, loans or equity capital. All these finance options have their pros and cons which must be carefully assessed and evaluated to determine the best fit for a specific business type.
Be ready to amend your estimates in your business plan if it changes before you meet with a potential investor
T
his is part one of my tips for Funding a business successfully. A business can raise finance from personal savings, grant, loans or equity capital. All these finance options have their pros and cons which must be carefully assessed and evaluated to determine the best fit for a specific business type. Having worked for so many years with businesses and aspiring entrepreneurs seeking finance, it has come to my attention that there is one common problem that many find difficult to manage when faced with the subject of raising finance for business.
Many are of the view that they should beg for the money when banks and investors are fully aware that their financial wealth is not dependent on the amount of cash hoarded in their bank account but rather the quality of investment they make with their money. The bottom line is, investors and banks do not make money keeping it in their safe. They make money when it is invested in the right soil with high potential for growth in positive cash flow and profit. This means that banks and investors are perpetually seeking opportunities to invest in the form of business loans, equity or a blend of both.
The question now is, what should an entrepreneur do to lay their hands on this cash? The ability to influence and persuade lenders or investors to follow your vision calls for a respectable amount of insight and capacity to press the right emotional triggers during social intercourse with them, whether on a frequent basis or not. Wrong use of language or expressions can do a great deal of damage to a business trying to raise finance. It is therefore important to seek the help and support of experience and qualified advisors who frequently interact in the lingo of investors and the banks.
To do otherwise will only expose you and your business to the risk of not securing the much needed finance for your business. One of the biggest myths that I have come across many times, is the DIY mentality in the areas of writing a solid business plan for business start-up, improvement or expansion. Some entrepreneurs will say that they have read books and that qualifies them to right a solid plan.
The first time reality hit them, is when they approached a potential investor or bank for finance, and then get quiz on their business plans, only to find that there are so many holes that have not been addressed. It is always a shame when this happens. So here are some tips to help you raise finance for your business.
1. Be clear about the amount of finance you are looking for. There is nothing worse than being ambivalent about how much you need when faced with a potential investor or lender.
2. Be clear about what you want the money for. No wise investor or lender will hand over their cash when you are not sure what you want the money for. It is always advisable you have a clear breakdown of how you expect to use the money, with clear estimates of costs of resources you plan to purchase. It might be that your cost estimate may change with time, as inflation is outside the control of your business.
Be ready to amend your estimates in your business plan if it changes before you meet with a potential investor. Now watch out for part 2 where I will cover my remaining five top tips.
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