Before every great business that came to be, there was a brilliant idea and behind that brilliant idea was tenacity. The world is full of brilliant ideas, but it takes real gumption to turn an idea into a thriving business.
Funding can be a major in obstacle when trying to get a business idea off the ground. Here are some basic steps to guide you in the right direction.
- Choose the right funding for your business
It is a waste of time and energy to pitch your business plan to the wrong group of investors. Different types of businesses require different types of investors.
- Venture capital – this is not an ideal investor group for small businesses. These investors seek seasoned entrepreneurs and high-growth industries.
- Commercial bank Loans – These are also tough for new businesses to land, as banks consider start-ups to be high-risk investments. Most banks will require collateral.
- S. Small Business Administration – the SBA is a great resource for seeking small business loans and guidance through the process. Check out their website at sba.gov
- Angel Investors – Private investors or investment groups that seek out potential opportunities. You can reach out to your local Small Business Development Center to help you find investment communities.
- Friends and Family – Seeking funding from friends and family can be risky. However, with tact and discernment, it is possible to successfully recruit them as investors. Avoid temptation to “borrow” funding, even if you have every intention of paying them back. Be clear that investing in a startup may cost them money and don’t accept funding from anyone who can’t afford to lose it.
- Attract investors
Prepare a detailed business plan to submit to potential investors. If you are reaching out to private investors, in addition to your business plan, prepare a compelling pitch to cast vision about your goal and get them excited about your business. If you are seeking a bank loan or reaching out to the SBA, a complete business plan or a summary memo will be required.
- Inspire confidence
When you pitch your business plan, remember, it’s not just about getting investors on board to fund your business. You need to convince them that YOU are the right person to run your business. Investors need to have just as much confidence in your ability to lead, as they do in your business to succeed.
- Do the paperwork
Seek assistance from professionals to review paperwork, contracts, and details. It is critical to make sure everything is properly signed, notarized, and in legal order before moving forward with an investor.
Never spend “promised” money. Even if an investor has committed to a specific amount, until the money can be physically accounted for, there is a risk for the deal to fall through. Unless the cash is in your hand or your bank account, it does not exist.
As you secure funds for your startup, it’s important to plan out your spending strategy and find ways to get the most out of your money. Virtual offices and shared office space is becoming a popular and cost-effective choice for business owners desiring flexibility and efficiency. As a startup, the less money and commitment you have to make to your first business location, the easier it will be to adapt to the needs of your growing business. For customizable office space and business service options, check out YourOffice. They partner with business owners to help them find the space they need, on the terms they want, for whatever duration suits them.