A lot of startups are springing up by the day and almost everyone is looking for funding to either launch or continue operations. The increased focus on developing the small scale businesses through external funding and government interventions means that there is increased amounts of capital available to entrepreneurs, and definitely increased competition for that capital. What do you have to do to stay ahead of the pack?
Whatever type of funding you might be aiming at – be it equity, grants or loans – you will have to be able to effectively pitch yourself to investors and explain exactly how you will execute your business plan.
Searching for investors will require a substantial investment of your own, but if you wisely and mindfully use your time, money and energy during your pursuit, you will have a higher likelihood of reaching your goals.
Here are a few tips for securing the interest of investors, and eventually raising funds:
Create a convincing business plan
A well written, organized and concise business plan is absolutely imperative; without this, investors simply won’t take you seriously. It should cover the following to give a good idea of what your business is, and how it will operate:
- Competitors
- Objectives
- USP (unique selling point)
- Sales forecast
- Budget
- Market potential
- Growth plan
All this important information needs to be backed by solid research and testing. If your business includes a product, have a working prototype that you can present to customers/investors. Show them that you’ve done your homework and know that your business is ready to go.
If you have little to no experience in writing a business plan, then don’t hesitate to seek professional help – this will prove to be a smart investment.
Carry out deep market research
Market research is the key to understanding whether your business will actually be filling a gap in the market, or just adding to the saturation of existing companies.
From the inception of a business, to its subsequent expansion, market research should become a continuous process – as the market evolves, so should you. Understanding your market in terms of customers and competitors will shape your venture:
- Knowing your customers will allow you to provide the best possible service
- Analysing your competitors will enable you to be better and gain a competitive edge
You need to be able to demonstrate to your potential investor, that there is a real demand for your product or service. The more customer validation and feedback you can receive at the early stages of your startup, the better. This is evidence of initial traction for the investor.
Utilise social media
The importance of a social media presence really cannot be overstated in today’s day and age. Strong social media profiles and exciting, interesting content can entice not only followers and customers, but also potential investors. Let your passion, knowledge, creativity and excitement shine through, and engage with your audience. Make it fun for them to interact with you through competitions, discount coupons etc. Here it is also important to know who your target audience is.
Secondly, don’t be afraid to connect with investors on LinkedIn and Twitter – this is also an excellent opportunity to get to know a little bit more about them. Make a note of topics they post about frequently, then use them during your pitch to show that your values and ideas intertwine with theirs.
Practice your pitch and network
Craft an elevator pitch and take every opportunity to practice it. This should include a quick overview of your business, the problems it solves, and what you need to make it better. Once you perfect your elevator pitch, you will be ready to network!
Networking is one of the most important ways of getting the word about your business out to all the relevant people. It is your chance to connect with other entrepreneurs in your industry, as well get to know potential investors.
To get started, begin networking within your local communities. This will be the initial step in talking about your business and sharing your ideas. You will have to network often and make sure to attend relevant events.
Assemble an amazing team
The people around you can make or break your dream, and building your team is sometimes as important as the business idea itself. You need people who believe in and share your vision. Your team needs to be passionate, committed and importantly, knowledgeable. Investors prefer to back teams that really know their market by having backgrounds that are rich and impressive in the market niche for which the company is engaged.
Most importantly, don’t give up!
When you’re just starting out, there will be many obstacles to overcome. No major startup, team, product, or service can be built in one day. It takes time, patience, and fine-tuning. The same is true with applying for or attracting funding. But if you follow all the necessary advice, be persistent and don’t give up – you just might be able to secure it.
