Breaking the Barrier: 4 Ways to Raise Capital for Your Business
Like every entrepreneur you have a great idea or service that you know will make you wealthy, however you have come to realize that it takes more than you thought. More time, more research, and more capital. The time and research is manageable, however raising capital has become a daunting task and now your dream is fading away. But wait… there is hope. Here are four startup barriers that need to be broken in order to raise the capital your company needs to succeed.
Don’t think that you have the best thing since sliced bread.
Many entrepreneurs think that their idea should be funded without question, but that simply isn’t the case. Make sure that you take time to research every aspect of your idea or business, as this is where you will discover different avenues that your company could move into. Additionally, it will open your eyes to what investors will be looking at as an investment. Once you are able to see without bias, you may realize why you couldn’t raise capital when you first tried.
Don’t Over Valuate Your Company
A critical part of obtaining funding for your start-up is ensuring you have valued your business appropriately. If you have the mindset of, “Me worry that I put too much valuation on my company? I don’t think so. It’s worth billions, I know that it is!”, then you might be in trouble. DON’T OVER VALUATE YOUR COMPANY. If you’re thinking this way and you have not been able to raise any capital, you need to determine why. First, ask potential investors you’ve approached what they didn’t like about your business plan. Quite often it is the valuation that you placed on your company. You think it is worth millions even before you get any funding, so when you ask for capital it is hard for investors to only get a small percent of your company for the capital that they are putting at risk. They don’t see the risk reward numbers matching their investment strategy. Hence, no investment. If you don’t know how to put a valuation on your company, then get help with your local SBA or CPA or even a broker who sells businesses. By not over valuating your business you’ll have a better chance of gaining interest from investors and raising capital.
Don’t Think You Don’t Need A Business Plan
Any entrepreneur that feels they don’t need a business plan for their start-up might as well pack it up right now. A business plan is another crucial element in getting funding and if put together properly, it will give potential investors an insight into your vision for the business. Take time to lay out your plan. Research your markets, your competitors, your strengths and weaknesses. Know all your financial numbers. By having all this knowledge, and a well thought out plan of action, investors will take you more seriously as a business and not just a hobby. It will also give them better insight into your overall ability to manage the business today and in the future, which makes them more apt to invest.
Don’t Give Up On Your Idea
If I could make one statement that will change the way you operate it’s this. Don’t ever give up! You never know why or when everything will come together for you. Times may get tough and it might look like your idea may never come together, but you’ve got to believe in your dreams, yourself and your family. Continually look at your business from the outside, not just from the inside. Looking from the outside in gives you a different perspective and can reveal so much that you might be overlooking. Look at your business, objectively, just as an investor would. To help, ask yourself a questions like:
What problem is my idea going to solve?
Will it improve mankind?
Is it scalable?
By being aware of the barriers to raising capital for your start-up and knowing how to break through them, you’ll be better prepared to reach out to investors and get that funding to build your dream.