As an entrepreneur, we measure our success based on various milestones we set for our company and ourselves. They are our markers for accomplishments and incremental steps toward a desirable breakthrough in achieving our financial and stable dreams. While many people think the challenges start when your business is established, they are sorely mistaken.
The first big obstacle many entrepreneurs face when starting their business is attaining the financial capital to fund the operations and the product (or services) production for their customers. As much as we can wish that there were some formula in receiving the necessary financial funding to start a business, we need to realize that this process does not come easy. Then again, you wouldn’t be an entrepreneur if it were easy.
Now, while there isn’t a one size fit all formula in attaining financial funding, there are various steps in how to improve your chances. Below, you will find five helpful steps in getting you started.
1. Know the Numbers
While having a business plan does not automatically grant you financing, it does give you the opportunity to holistically understand how much you have and how much you need to be successful. This information will allow you to explain to investors what your business does along with marketing information, financial metrics, and product launch date. Regardless of how you present your business plan, knowing these numbers, especially why you need these numbers, will play a crucial step in attracting potential investors.
2. Calculate the Cost
Yes, this may seem redundant since the overall expenses of your business will be stated in your business plan, but the know your numbers inside out is always incredibly beneficial. Start off by asking yourself this overarching question: How much money do you need to get started? To answer this, try calculating your expenses prior to seeking funding. This entails how much it will take to get your business off the group, including office equipment, insurance, legal counseling, marketing, and product testing. Once you have identified the cost, you will be able to find a more accurate number that can be translated to your potential investors.
3. Know Your Investors
When it comes to a business, you can attain the financial sum that you need from a variety of options. This can be from a family friend, a bank, or even an entire corporation. Below, you will see three big investors that can help you through the process. Make sure you understand the risk as well as the benefit when working with each individual group:
- Venture Capitalist: this is a business that will invest money based on the overall risk and return that they can see within your business.
- Angel Investors: these are typically affluent individuals who will provide a short amount of your capital in exchange for small ownership equity or debt (with interest) based on how much is asked.
- Commercial Lenders:these are banks that are likely to invest in a small business
It may sound cliché, but sometimes the best way is the old fashion way. When it comes to networking, start by what you know. Sign on to various social media properties like LinkedIn and start interacting with various professionals and businesses within your field. In addition, try finding various entrepreneurship fairs or programs that you can network with.
5. Be Prepared for Any Situation
Whether it is a big venture capitalist firm or a small one-on-one meeting, make sure you are prepared for any situation. Do not waste any time for a loss golden opportunities. Try to create various presentations that best fit specific investors. In addition, practice and internalize those numbers (financial metrics). Knowing the numbers no matter who you will meet will always work in your favor.