Money, Money, Money

You’re an entrepreneur. You need money to build or grow your business. And you don’t have the foggiest idea of how to go about raising money for our venture. I’ve been there and done that, and believe me, if you don’t know the ground rules, you’ll make some mistakes that could follow you for years to come.

I’ve been a part of 15 start-ups and, as a Master Business Coach, worked with over 400 entrepreneurs on their business ventures, and believe me, I’ve experienced or seen it all. So, I wanted to list a few of the pitfalls and requirements of getting someone to give you their money to fund your business/idea.

There are several sources that you can look into for cash infusions. Venture capital sources are one, another Angel Investors, then we get into private equity, and finally, friends and family.

Avoid friends and family.

Most friends and family do not understand business and the challenges and risks involved. They love you, so they give you money. I’ve seen entrepreneurs take $100 from an Uncle, $1,000 from an Aunt, and $50 from a cousin, and they all expect to get rich. Most do not understand that they may not get their money back, let alone get a profit returned. Then, after some time, they get antsy and want their money back or wonder when they can buy a boat with the expected wealth. This situation can get nasty quickly and cause family issues for decades. Do not give in to the temptation of family investment.

I’ll keep this next segment simple. If you go to outside sources, you had better be ready, or they will kick you out the door so fast you won’t know what happened. You’ll get shown the exit so quickly you won’t have time to be embarrassed. If you’re talking with your banker, an angel investor, a private investor, or asking for venture capital today, understand this: they will have requirements.

The days of having a great idea that you’re all pumped about and getting money based on the idea or the potential of the idea that you’re selling are OVER. Savvy investors of any ilk will require you to provide three things, if not more. They will ask;

Q1.? DO YOU HAVE A BUSINESS PLAN?

So write a BUSINESS PLAN. If you do not have a well-thought-out business plan to give a potential investor, the meeting will be over quickly. A business plan shows that you’ve asked yourself critical questions about your business. A business plan shows that you’ve researched your business potential. And that you can clearly describe why the market needs your business. A good business plan should include financial projections, potential sales, expenses, etc. An investor wants to know that you care enough about your business that you’ve thought about it over and above your emotional connection. One more thing: DO NOT download a business plan template; it just smells unoriginal. Also, do not use your handy dandy AI tool to write your business plan. An intelligent investor can smell that a mile away, and it stinks.

Q2. HOW MUCH OF YOUR OWN MONEY DO YOU ALREADY HAVE IN YOUR BUSINESS?

Ask yourself this question: If you were investing in a person, would you give them a large amount of money if they didn’t believe in the business enough to put their own money into it? I doubt it. A savvy investor wants to look into your eyes and see an entrepreneurial fire glowing. They want to see a deep personal cauldron of passion for your endeavor. They want to know that you’re willing to go the extra mile to ensure your business survives and thrives. They want to see and feel that you’re eager to put everything on the line to make success happen. And all you need is some help to get that done. Promises of financial return mean nothing. What have you done to convince that potential investor that you will do everything possible to protect their investment and grow it?

Q3. HOW MUCH REVENUE IS YOUR BUSINESS CURRENTLY GENERATING?

This question is not a typo. No investors will invest in a business that is not already generating some form of income. Investors will never, ever give you money for a great idea. That ship has sailed. It doesn’t always matter to an investor how much you are generating, but they want to know that the business is viable enough that it could blow up with an injection of capital.

Building a business is hard, and you had better be ready for it if that’s the world you crave to jump into. It takes nerve, passion, stamina, belief, determination, a possibility attitude, a strong work ethic, and most of all, lots of planning.

So, build your business right. Take your time, and don’t skip any steps. Your rewards will be incredible, and you have created a business to last.