By Guest Writer Devin Partida
Getting your dream running requires capital. You may need to secure investors or loans to open your doors since the average business needs $10,000 or more to get started. How likely is it your company will find the necessary funding?
According to Statista, entrepreneurs start over 800,000 businesses a year. The number varies annually, but different startups constantly vie for investor dollars. How can you stand out from the other brands seeking funding and ensure your proposal makes the cut? Here’s how to ensure investors are more likely to say yes than no.
1. Have a Plan
Before you present your business idea to an investor, you better have a clear picture of what it takes to succeed in your industry. Do the research and come up with a solid business plan outlining where revenue comes from and when. Know who your competitors are and how you’ll market effectively.
When someone gives you money, they want to know you have a plan to see they get their investment back plus some profit. If you’ve ever watched the television show “Shark Tank,” you know the hosts ask for figures and hard facts. Be prepared to answer the tough questions investors have.
2. Take a Gamble
Sometimes you’ll have to get creative to secure the funding needed for your startup. We aren’t saying play the lottery, but it also wouldn’t hurt. After all, the odds of winning some games are one in 240,000. Your odds of securing an angel investor may be much better.
Don’t be afraid to ask investors you know through family connections if they’re interested in getting in on the ground floor of your new venture. Ask for an appointment with the big name you think would say no. Don’t be afraid to stretch and share the idea you know is a good one.
3. Show Your Knowledge
You probably have a dream because you love the industry or idea. You’ve spent hours researching, learning and developing new methods. Show how much you know by giving talks, creating explainer videos and getting the word out.
You can also get startup crowdfunding through online venues. Make a video explaining your product or service and secure funds from multiple sources. It doesn’t matter where the money comes from to make your dream a reality. It only matters if you have enough to get going and the repayment terms are fair and drive you toward success.
4. Embrace New Technology
Many investors want to know you understand the technology most likely to impact your business. Take the time to understand things such as cryptocurrency. New developments in artificial intelligence (AI) impact nearly every type of business. For example, around 75% of large banks implement some form of AI in their operations.
Show potential investors you understand the changes in the marketplace and how they impact your business model. You may impress them so much they choose you over another option. Having more knowledge certainly won’t hurt your odds.
5. Find Other Options
Another option is to seek a small-business loan. Talk to your local Small Business Administration branch about possibilities. The government sometimes offers incentives to open new companies in specific sectors, such as energy development. Your local bank is also a good source of startup funds.
When you take on investors, you must then answer to them for your profit and loss. Depending on your agreement, you may owe them so much you barely squeak out a profit for years. Carefully read over any agreement and make sure it’s fair to both you and the investor. It doesn’t help to gain the money you need if the terms are detrimental to your growth. Be smart, hire a lawyer if required and set yourself up for future success.