If your business startup needs funding, you’re not alone. In order to maximize your chances of success, you must have adequate funding. Trying to start a business on a budget is rarely a formula for success and because of that, you will need funding.
Like most, some of that funding will come from banks, relatives, angel investors, and venture capitalists in addition to your personal savings. In order to increase your chances of gaining the funding you need, you have to know how to approach those who may supply your funding.
Experienced angel investors and venture capitalists were asked about the mistakes they see on a day to day basis that keep otherwise great businesses from gaining the funding they need.
It’s Who You Know
You are much more attractive to investors if you have locally well known attorneys, accountants, and marketers working for you. Investors will take you more seriously is they know that you have an a-list of business professions working with you.
The Wrong Funding Sources
Time is money especially when tending to your business startup. Every hour of work time you have needs to be spent making money. If you spend time readying yourself for a presentation in front of venture capitalists who don’t invest in your type of business, you’re wasting your time and theirs. Before setting up meetings, have a clear idea of their investing style.
Lack of a Foundation
Most investors will want to see evidence of a clear plan, a product that is past the idea stage, and evidence of some revenue. Gone are the days when investors will invest in the idea you had while walking down the French Riviera.
Every presentation needs a story and the story should go like this: You identified a widespread problem, you conceptualized a solution, and now you’re excited to get started. Lack of a compelling story will almost definitely equal no funding.
Not knowing what you need
What if you went to a friend to ask for a favor but you didn’t know what kind of favor you needed? When you need funding for your business startup, you must know two key facts: How much money you need and what your company is worth.
If you get beyond the initial meeting, the investors will want to see your financials. Before you ask for funding, have all of your personal and business finances in order. The fine-toothed comb will come out.
Lack of Incorporation
Before asking for funding, your business should be registered with your state. At the very least, it shows that you are serious about creating a superior business.
Like everything else, learning how to ask for funding is a skill that takes education and practice. Don’t lose potential investors because of lack of education and practice.