How to raise funds for business
Have a strong business plan
A business plan holds the strategy, vision and roadmap for your company. Investors, banks and government grants will always ask to see a business plan before investing funds.
Consider your vision statement, unique selling proposition, marketing and sales plan and your operational needs. Your business plan should also have a clear financial plan outlining cash flow, income and expenses.
Know how much you need — and ask for it
Before asking for funds, you need to know exactly how much you need to start or expand your business. This should be done in your business planning stage. Be sure to factor in the costs of production, salaries and operations, as well as marketing and sales costs.
Once you have this number, ask for it. Many SMEs make the mistake of asking for less capital than they need, and end up unable to successfully execute their vision. A general rule of thumb is to plan for everything to take twice as long and cost twice as much. Prepare for the worst, and be sure to factor in a buffer for tough times.
Network, network, network
While you can cold call venture capital funds and attend pitching events, in most cases the best way to raise capital is to build relationships with other like-minded people. Attend networking and start-up events and create a solid network of investors, executives, experts and industry leaders. You’ll never know when one of these can translate into an opportunity for capital.
Lastly, remember not to say ‘yes’ to just anyone. What may start out as a well-needed injection of cash can quickly turn sour if you don’t see eye-to-eye with your investors. Weigh each option carefully, and don’t be afraid to ask for more time if you need it.