How to think about raising money for your business
If you're looking to start a business this year, one of the first things you'll need to do is raise some funds. But how do you go about financing your business idea?
The first thing to do is a lot of research and evaluation. Be honest with yourself about your abilities, the work you’ll have to put in to get your company up and running, and the amount of money you’re hoping to raise. Research all the options that are available, and evaluate how they would affect your end goal.
Ask yourself: Is your crowdfunding target realistic? How much of a stake in your business are you willing to give to potential investors? And if you want to find a mentor who can help give you direction and guidance, make sure you find a suitable one. Find out what they do, whether they’ve mentored others before and which sectors they are interested in.
The next thing to do is get out there and network – your profile matters. Attend industry events such as seminars and conferences. Talk to as many people as possible, and do not immediately launch into a pitch of your product. Be sure to listen and learn from what people have to say.
Networking doesn’t stop at face-to-face contact, either; interact on social media, join LinkedIn groups and keep the relationships going online. When you do approach potential mentors or investors, or if you launch a crowdfunding campaign, you’ll have a degree of visibility. In fact, the more proactive you are in building your profile, the more likely it is that potential investors will feel confident enough to put their faith in you - and their money in your company.
Remember that the more relationships you build, the better the chances that your network will put you in touch with the people who can help your business.
Don’t stop evaluating along the way and be flexible to what comes in your direction. While winning investment might look like the best option now, don’t discount any other opportunities that come your way. For example, crowdfunding might not have the prestige of an investment from a big-time entrepreneur, but it will connect you directly with future customers, and you will have more control over the process.
It’s also important to make sure that your potential business success is not contingent upon gaining a large investment. Many successful companies - including Virgin - started with modest funds. Right now, investors might seem like they are the gatekeepers between you and your dream, but the one person who can make your business succeed is not an investor, or even a mentor. It is you.
Before making financial decisions always do research, or talk to a financial adviser. Views are those of our mentors and customers and do not constitute financial advice.