Whether you are looking for funds to set up a business or expand an existing one, raising capital for your business is something you will have to deal with at one time or another. Raising capital is quite a process. You will be required to plan, learn about the different options of raising funds, prepare a presentation and get to know the investors.It is not an easy thing and you are likely to face challenges, but with proper planning and thoughtfulness, you can pull through successfully.
If you are planning to raise capital for your business, here are steps to follow for a successful process.
1. Analyze your business
Assess and analyze the different aspects of your business to determine the health, strengths and weaknesses in each of them.
· Check out your team and analyze the skills available. Determine if you will be requiring to hire new members or to retrain the existing ones. If you are yet to assemble a team, write down the skills you need to hire to get the business running.
It is good to note how you are going to hire. Will you handle HR yourself, or are you going to outsource? Outsourcing hiring and HR needs to a body such as Global PEO can expose you to a larger pool of talents, and save you time to concentrate on growing the business.
· Research the industry and the market. Do not forget to analyze the competition as well. What will you need to stand out from the rest? Will you need additional advertising to get your products out there?
· Analyze your product to determine if it is ready for the market, or it might need some improvements.
· Draw up the financial projections.
All these will help you determine how much capital you need to raise. You will also be facing potential investors and lenders later on. This will help you understand your business, and be ready for the tough questions they might ask you.
2. Understand the different options of raising capital
There are several ways to raise funds for your business. It is necessary that you understand each one of those available for you. This will help you understand the risk involved, as well as what is required of you to get the funds.
In addition, it is not guaranteed that you will get the amount that you need from one source. Analyzing different options will give you a backup plan in case you need it in the future. The less risky options include family and friends, angel investors, venture capitalists, crowdfunding pledgers and investment groups among others. The ones with a higher risk and even more expensive include bank loans and credit cards among others.
3. Put up a presentation
Once you have determined the amount that you need and which ways to raise your capital, it is now time to put up a presentation. It is good to note that potential investors will be looking to know your business inside out. Include the information about your company, the products, competition, your team, target market, milestones and future plans. Do not forget to highlight your strengths and address your weaknesses. There is also the likelihood that they will research about your business. Be prepared to lay everything bare, including any past mistakes. It would be better if they learn it from you than get a shocker if they learn it from another source.
4. Find the investors
Now that you have a presentation ready, you need to reach out to the people you will be presenting it to. However, you will need to look for them first.
You can start by researching for companies that fund businesses in your niche. This has an advantage in that the funding is tailor-made for your kind of business. They also have experience working with businesses like you. They know your potential and they will be more willing to offer funding.
Don’t stop there, start networking. Go to places where you are likely to find investors such as conventions and business events. You can also network through social media pages such as LinkedIn and Facebook.
As said before, raising capital for your business is not an easy task. Not all people will be prepared to listen to you. Others may not be looking at investing at that particular time. Being prepared for such outcomes will save you a lot of stress and frustrations.