5 Tips for Raising Capital for Your Small Business

5 Tips for Raising Capital for Your Small Business


5 Tips for Raising Capital for Your Small Business
Here are 5 tips to keep in mind when raising capital for your new ventures:

  1. Have the basics in place. First things first: every startup needs a one-page business overview that defines the following: your mission, market, and target audience; the problem to be solved and your solution to it; the competitive environment into which you are entering and what unique characteristics set you apart; a distribution and marketing plan, revenue and expense summaries, capital requirement, and ROI; important milestones and timelines to accomplishing them; and finally, a manager summary. Now, after reading this, you might be thinking, “how in the world will I fit all of that onto a single page?” Don’t panic. Lucky for you, if you understand your business well enough, fitting it all on one page won’t be a problem. If you can’t convince yourself in a single page, then you certainly won’t convince anyone else. Additionally, you will need a one-page financial overview, and a prepared presentation to give to potential investors. Your presentation should be no more than 10 slides in length and 20 minutes in duration. In a typical one-hour meeting, your goal should be to get the presentation out of the way quickly and efficiently, leaving the majority of the time open to any questions your audience might have.
  2. Don’t waste time.Many entrepreneurs fail to hit the ground running. They operate under the assumption that they should have all the pieces in places before getting started. This is a mistake. The most successful people don’t hesitate. They see the difference between having resources, and being resourceful; and recognize that you can’t have one without the other.
  3. Bootstrap.Many entrepreneurs don’t realize how long it takes to raise money. Raising capital is a process that, often times, can take as long as a full year. So, how do you hit the ground running while also raising capital? Bootstrapping. Use what resources you have to your advantage. This can be a fast and easy way to bolster your capital raising efforts. It will help you to develop your product and demonstrate to investors your resourcefulness simultaneously. So, how does one bootstrap? First, determine exactly what it is that your business needs to move forward. Then, define your resources – that is, what can you offer other entrepreneurs to help them progress their own ventures? Finally, make a deal!
  4. Identify your ideal investor.Entrepreneurs might have everything in place – the idea, the plan, the team, the execution – yet, they can’t seem to land investors. Why? Because, often times, they’re pitching to the wrong people. To solve this problem, businesses should create an ideal investor profile. Start simple. Who is this person? How old are they? What are their interests? Then get more specific. What is their professional background? What kind of deals are they attracted to? What size company do they prefer? How much do they invest, on average? What do they expect to gain, and how soon?
  5. Deliver Information In Bite-Sized Chunks So many entrepreneurs assume that providing investors with as much information as possible up-front is what gets the deal done. Actually, the opposite is true. Investors hear pitches from lots of hungry entrepreneurs concurrently, which is often overwhelming. Paperwork piles up on their desks, information gets jumbled, and businesses get lost in translation. Rather than coming in guns blazing, drip information in bite-size pieces. Start with just a one-sentence elevator pitch. Nothing fancy. Just capture their attention. Then, expand on your elevator pitch with one-paragraph, then a full-page summary. So on and so forth. Each subsequent communication with an investor should be specifically tailored to their concerns. Address them one at a time, rather than all at once. This way, you can build momentum to toward a successful close.
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Business & Marketing Tips: 5 Tips for Raising Capital for Your Small Business
5 Tips for Raising Capital for Your Small Business
5 Tips for Raising Capital for Your Small Business
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