Tag: preparing for investment
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After writing a business plan, Raising finance for a new business is often the most challenging task of the entrepreneur. Yes the business plan can be created using the latest business plan software and investors can be found through networks such as Investors Network, yet still it will take plenty of dedication and commitment from the entrepreneur. No one enjoys asking others for money (well almost no one) and going hat in hand to your local bank or investment firm is perhaps similar to a trip to the dentist. But it does not to be that hard. Raising funds should be seem as your first real opportunity to see whether you fist of all can communicate your idea effectively an secondly whether other professionals see the opportunity in the same light that you do. Its one thing convincing friends and family, who after all are often interested in seeing you in a good mood, vs convincing the people to such an extent that hey will invest money into the idea. Granted that if you are one of the lucky few, friends and family may be the same people who will be funding the business in the first place.
In general, raising finance for your business can be divided into 6 simple steps.
1. Seeking out the Investors
Whether you are looking for Venture Capital, Angel Investment or loan funding, this is arguably the hardest part of the process. If you are someone who regularly runs to stay fit you will know that the hardest part is to put your shoes on and start running. Once that is happening the rest sort of happens by itself. Most people start within family circles, friends, business associates and other acquaintances. Others may go directly to the bank or government institutions proving grant or loans for start-ups.
Once you find the right contact willing to finance your business, a well written business plan should normally take care of the rest. The first step often takes the longest so don’t loose fath when I takes longer that expected. Is your idea is viable and it excites you then the right investor or investment body will come along.
2. The Approach.
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Preparing your business for investment can be a stressful process. This does not always have to be the case. Once a potential investor agrees that your idea or business looks potentially viable for investment you will need to ensure that your business be ready for investment? A recent client was in this same boat two months ago and because he never really believed that the day will come so soon, his company was not investment ready. So how do you become investment ready? Here are a few questions you can ask your self together with the different issues related to the questions that can set you on your way to becoming investment ready very quickly. 1) Describe the background and history of your business This first step in explaining the investment ready status of your business may seem straight forward bur there may be more to it then meets the eye. Points that you may want to cover here is how your business cam into being. What were the difficulties encountered when starting and how were these overcome? What were the barriers to entry you encountered and how difficult may it be for future incumbents to do the same? Has your growth been erratic or stable and what roles has other industry trends plaid in your success up to now? Investors want to know, not only that your business has a high potential for future growth but also that the business has been able to handle demand and other challenges that show up at your door during the initial stages. 2) Illustrate the Organisation Chart and resumes of your senior management Potentially one of the more straight forward issues to cover, your organisation chart should be illustrating the flow of communication within the business and the effectiveness of this strategy. In addition the resumes of your senior management team needs to illustrate what your company stands for. Where are your strengths? How does te experience in your team contribute to your competitiveness and uniqueness of product. Is there a good balance between skills, experience and cost within the team? 3) Your competitive advantage By this time your potential investors may already have a good idea of what your product or service is and the level of uniqueness that it offers. This may be a good opportunity to come up with related facts, statistics and research related to the uniqueness of your product. Your unique selling point/proposition or USP as its also called tells the investor what sets your business and the products and services of your business aside from the competitors. Why will customers prefer to by your product rather than that of a competitor in other words? This is a great opportunity to show just how unique or good your product or service is. Focus on benefits rather than features of the product. At the end of the day customers are interested in the benefits of a product. What can this product do for me, hw will I benefit? What is the difference between a benefit and a feature? Here is an example. Feature: Intel core Duo Processor Benefit: I can work with more than one application at the same time with no loss of process speed. Benefit: I can get more work done in a day. Benefit: I have more time to spend on that which is most important or enjoyable to me. Although your investor/client think that features are important, they can associate better with benefits. 4) Provide a copy of your SWOT analysis A bit like a status report on your business your SWOT requires of you to be honest about what’s going on in the business and offers you the opportunity to be innovative and creative when coming up with solutions to challenges as well as suggest potential opportunities that exist within your business and it’s market.
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