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One of the keys to successfully starting a small business is acquiring the startup money needed to get it off to a healthy start. However, this can be a huge challenge for many different businesses in an era where banks and investors are feeling warier—and stingier—than ever. This doesn’t mean that they are not investing, but merely that you have to present a very special package in order to assuage anxieties. Here are a few tips for raising funds in this unfriendly economic time.
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Show the demand.
Investors know that it is almost impossible to create demand in an economic recession, even for a superior product. However, it is definitely possible to sell a product, even a merely passable one, to a market that is demanding it. In fact, a product that is in demand, sold by a person with proven sales experience, is almost irresistible to investors because it is the closest to a ‘sure thing’ that you can find.
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Show an existing customer base.
Just because customers are looking for an answer to a problem doesn’t mean they think your solution is the answer. You need to show that product already has a customer base of people willing and even eager to buy it. There are more than a few ways to show this: customer testimonials, positive beta testing and sampling results, high repeat sales rates, and positive coverage in different press venues. If your customers are just waiting to buy, investors will want to give them the opportunity.
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Show an effective team.
Even the best product with a huge amount of demand can’t succeed without people who know how to work together to make it happen. This makes your initial sales team a crucial part of getting investment capital. Hire people with well-rounded experience as well as a good work ethic and the ability to evolve along with the needs of your business. There is no room for laziness or selfishness on your team! If you have a team that works together well and has the knowledge and experience to get sales, your investors will feel confident in your ability to provide returns.
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Believe in your vision.
When you are asking for investment money, you must put all of your sales energy into this process. Here is a chance to show off the sales acumen that you bragged about in your business plan. Remember, investors know that if you can’t sell your business, you probably can’t sell product either.
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Keep trying.
Different investors are looking for different ‘packages’ so don’t be afraid to turn your rejections into new opportunities. Many business owners have to look for funds in a variety of places before finding the one that believes in their vision. If traditional bank loans don’t work, turn to investment firms specializing in small business. If you get turned down there, look for nontraditional funding such as private investors. If you know that your business is going to work, don’t let rejection hold you back.
