The RIGHT way to Solicit Small Business Funding

Nobody likes to ask for money but if you’re looking to start a business, there is a good chance that you will have to solicit small business funding. Whether it’s venture capital, friends, banks, or other source, your pitch should be the same.

Some will tell you that it’s all about your skills as a salesperson and while that is certainly an element, what’s even more important is that you have a command of four key components.

The Project

This is the cornerstone of your pitch. What is the business? What is unique about it that will make customers flock to it? What is it that will make an investor love your business or idea? Stay away from worthless sales jargon. Make it real and make it accessible to the investor. The more you try to “sell” it the more the investor will be turned off. If it’s a great project, it will sell itself. Make sure it is!

The Partners

Who are your partners? You aren’t going to be an expert at everything so you want partners who fill in your gaps. You want your partners to have proven experience as entrepreneurs and preferably in the industry of your project. If you were marketing a new line of golf apparel, do you want Tiger Woods as a partner or Mike Tyson? Get the right people as partners and once again, your partners will sell themselves and this will make small business funding easier to gain.

The Financing

Get some help with this if you aren’t a finance person. You have to show your potential investors real figures. If you’re a startup, you won’t be able to show previous revenue figures but you can show projects that are based on exhaustive market research. Be realistic. Investors don’t want to see the best case scenario because that won’t happen.

Where else is the financing coming from? Show them how much you need and what their share will be as well. Last, how are you going to use the money? You need to know how where every cent of the money will go. (Don’t tell them that some of it is to pay you)

The Management

Investors want to know who will be running the day to day operations of the business. Just like the partners, what is the management team’s experience, background, and track record? If you don’t have a management team other than you and your partners, make sure that you can show them that you have more than just financial experience. You need to have real experience managing this type of business or at least related experience.

The key to gaining your small business funding is keeping your pitch to investors concise, factual, and real. Investors have heard the sales jargon before and it normally comes out when the person is trying to cover up the weaknesses. Investors know that there will be risk and that every idea will have areas of weakness. Just be real. A 10 minute pitch that has these four area addressed is plenty.

Recommended Reading:

This entry was posted in Business Formation Services, Startups and tagged , , . Bookmark the permalink.