Attract the Funding You Need
Startup founders know that attracting investments can be an incredibly challenging task — even more so if your startup doesn't quite have an extensive track record of earnings and profit.
Luckily, there are options out there for even the newest, youngest startups. Here are four tips to attract the funding that you need.
1. Ask Family and Friends
Start with the people you know. Family and friends are more likely to lend you money, as opposed to strangers who don’t know you. Since you already have an established relationship, this works within the boundary of trust — which is always helpful at the start of any business relationship.
There are plenty of startups that make use of this option, and many of them turn out successful. For example, the co-founder of Intuit, Scott Cook, borrowed money from his family to help start his software company when he first began.
One person may not be able to finance the entire investment, but many people in your network could contribute and possibly make your dream startup come true. And when your company is finally turning a profit, you can pay back that support and more.
2. Present Your Business Plan
A business plan is a vital part of success because it shows that you're already thinking about the future and preparing for your business goals. By presenting your business plan to potential investors, this communicates to them that you're serious about your work and ready to put the effort in.
If you have never written a business plan, don’t worry. There are tons of resources available on writing the perfect business plan. Start with your overview and objectives, and then get into the nitty gritty details about the work you want your company to do. A solid business plan proves to investors that you know your product, your expenses, and that you have a good financial plan.
3. Prove You Can Get Results
Many investors will want to see results. One way to show this is through cash flow forecasting. Simply put, a cash flow forecast is a projection that will help you assess how much money your company will have over a period of time, including after big expenses. Investors will want to see how much money will be coming in from sales and profit, and how much will be going out as expenses and overhead.
While this can get very complicated, there are trained professionals with the skills and background that can help you. If you're struggling to manage this on top of the day to day of setting up your startup, you can hire someone in the financial services industry — specifically Book + Street — to do the cash flow forecasting for you. We are able to make precise and accurate forecasting that will not only impress investors, but will also help you make more grounded decisions about your company in the weeks and months to come.
4. Know Your Investors
Study your potential investors before you meet. Find out where they are from, what their interests are, where they have worked, where they have already invested and most importantly, why they would be interested in investing in your company. This way, you'll know how to craft your sales pitch towards what is important to them, and you can focus on those points.
Doing this means you can also anticipate any possible concerns they may have. For example, if a previous investment in tech fell through, they may be skeptical to invest into another one. If they invested in the housing market during the 2007-2008 financial crisis, they may not be eager to invest into real estate. Knowing details like this can help you craft a successful pitch to future investors.
Effort Yields Results
Finding potential financiers to invest into a start-up company is difficult, but it is possible. Although finding funding might seem like a daunting exercise, there are tons of options available to you, no matter what your budding startup's needs and capabilities are. With the above tips, you might soon be on your way to making your business dreams a reality.
Author: Maxine Fredrik