If you’ve got a great idea for a business or product, fantastic! But from this point onwards, you’re going to need money. Unless you’re lucky enough to be in a position to bankroll yourself, you’re going to need to look for business investors for support. In this article, we’re going to go over a few basic funding routes which, we hope, will get you the necessary cash to kick-start your new life. From creating a business plan to meeting with potential investors and venture capitalists, there’s a lot to do when it comes to getting funding for your business.
It is unlikely a start-up business will be able to secure a loan from a bank. An established small business is another matter but start-ups are notoriously difficult to get loans for because of their unpredictable nature and the high risk of the business not actually taking off. It’s vital you prepare yourself for this challenge and only begin looking for business investors when you have something solid to present to them. Here’s how we think you should begin your journey into the business world.
- Create a thorough, cohesive business plan – invest time and effort into developing a document which portrays your business in a positive yet practical light. This allows potential business investors to get a good overview of your business concept right from the start to avoid wasting their time and yours. It needs to be detailed and well-researched, demonstrating your knowledge of the market, your target customers and your understanding of the world of business overall.
- Approach venture capitalists – although they don’t always have a good reputation when it comes to small businesses, venture capitalists can actually be great for start-up companies. The key to securing their support is to remember they’re business people too and they’re investing funds which belong to their clients. They are going to be, naturally, reluctant to invest in risky and unprofitable businesses. In order to get their financial backing, you need to prove both you and your business are a justified, stable investment with the potential to grow and begin making decent profits quickly.
- Contact local private placement investors – these are usually groups of wealthy individuals who are looking to invest in a business. They typically meet every few months to hear proposals and discuss if any new business plans are of interest to them. Alternatively, individual private business investors, sometimes referred to as “angels”, can also be contacted to discuss investment options. They usually request a 20 to 25 per cent return on their initial investment which, given the risk, is a justified ask. Although not dissimilar to venture capitalists, private placement investors often have business experience themselves, so if you find one who worked in a similar area as your own business, you could be in for some really valuable support and advice.
- Set up a crowdfunding page – why not get the general public involved and set up a crowdfunding account online? These are an increasingly popular way for businesses to get investments and rely on hundreds if not thousands of people to become your business investor. Use incentives such as discounted products or free giveaways to inspire more people to invest larger amounts. The power of social media should also not be underestimated.
And finally …
- Don’t rely wholly on your business plan – true, a business plan is important and it should contain a section about funding and stakeholders, but at the end of the day, it’s just a few sheets of paper. Investment comes to people and products, not a well-designed template on what you intend to do. Prove to the investor that you and your unique idea are both worth investing in. Show them your personality, your passion and your skillset and allow them to see the potential in you and your business.
If you would like help securing funding for your business start-up, contact the experts at Real Trade Business Solutions today. With years of experience, we can help you devise the perfect business plan and prepare you for the process of meeting and securing your business investors. Call today to arrange an appointment with one of our advisors.