Looking for funds for your startup can be a hassle. Here are things to do when looking for funds for your startup.
Convincing others to put their money into your SMB takes skill and hard work. Since it is not a conning game, there are things any legitimate business owner should do when seeking money for business.
1. Get your records in order
The value of records in sourcing for external funding cannot be overemphasized irrespective of the size of the business. A small business with straight records stands a better chance of winning the approval of investors that a midsize business with no papers.
It is essential to have an accounting system in place from the very beginning to keep records of the business transactions. Some of the vital documents are taxes, stock transfers, and ownership agreements. It is also worth ensuring that the registration certificate is up to date.
2. Get a corporate attorney
A corporate attorney is the first person to bring on board when planning to raise money for startup. They play an essential role in the drafting of your business plan. A good attorney will ask you about your plans, how much money you need and how you plan to raise it. They will also draft agreement terms with the investors.
It is important that the attorney you chose have some experience in your line of business. If it is a firm, then it should have experience in the personal federal and state’s tax laws. Experts also advise that you tag a CPA along. However, an attorney with the same qualifications will be a good option.
3. Prepare a business plan
A business plan is a roadmap into the life cycle of your business. It shows the investors your idea, the opportunity you wish to capture, and how you plan to make it profitable. It also gives a growth plan for the future of the business.
Investors do not need most of the details of the plans. Past performance, measurable and attainable future goals and the performance metrics are the things they need to show.
4. Build a team
Investors are interested in more than the ideas. They need to know that you have team that is capable of delivering the milestones that the proposal promises. They need to understand that these members are trustworthy and reliable. It is important also for the investor to know that your team is capable of handling the challenges that come with startups. No one wants to risk his or her money in a business that has an advisory team that will abandon the venture when the going gets tough, as it surely will.
5. Research on the funding source
Not all investors are worth your time and energy even if you are in dire need of capital. Research the best option; they will do the same if they are interested in your idea. An excellent way when choosing a prospective source of capital is checking their area of interest. You do not want to sell your idea on healthcare investment to a firm that is interested in real estate investment or renewable energy, for example.
6. Prepare a pitch
You will eventually have to present your idea to a panel of investors or just one investor. Your pitch will determine whether you get the funding or not. There are several guidelines on how to write a pitch; what to include and the mode of presentation. The one that seems most appropriate is the 10/20/30 principle by Guy Kawasaki. It stands out for two reasons: Guy has a vast experience as an investor, then, it is simple, logical, and practical.
The 10/20/30 principle proposes that your slide should be 10 slides long, presented in less than 20 minutes, and use at least a 30-point font.
7. Be willing to learn
Finally, learn to be coachable. This is a personality trait that makes an entrepreneur stand out. Most investors have been the same path several times and understand the mistakes and frustrations that you are bound to meet. As a result, they prefer people who listen and are willing to learn. Learning to have a teachable spirit takes time, but you are only fit for an investor’s support after you have mastered it.