Featured Image Caption: Ways to Get Funding for Your New Business
You are all set to release your product after months and years of working on its concept. You have also garnered feedback from some of your acquaintances and colleagues who have supported you all throughout the process. You are now all geared up for setting up your business and promote your product and similar services likewise, but one major thing is hindering the procedure and that is losing out on time and patience. If you are a fresh business mind, then you can relate to this feeling and the major obstruction and key factor that comes into play for establishing a new business – Funding.
Engaging with customers and having a prototype in hand is all good, but you cannot dream of achieving the success you wished for and had in mind while designing the product without a proper funding source.
When it comes to seeking capital for promoting your new business, there are three major options for financing:
- Bootstrapping – Seeking money from your close ones including your family, friends, and colleagues.
- The traditional form of lending such as banks and other co-operative funding societies.
- Angel investment and liberty lending that you can approach through the help of the Internet.
Although there are definitely other options for funding, the point is what should be the important considerations that you must be mindful of prior to seeking fund from any source. When you are determined to seek funding from an outside source, keep the following things in mind:
Clear Vision and Milestones
Before seeking fund for your new business, the first thing to clear off your consideration list is that you are clear on the vision and are determined to reach the milestone you have set for yourself. In case you have not given a thought to this, ask yourself where and how far would you like to take your business? This is particularly essential to captivate the attention of the investors and get them willing to invest in your concept. Until and unless you are able to perfectly articulate your passion, vision, and your motivation about your business, no one will bother financing your idea. Once you are able to showcase the big picture of your business including the milestones that you have dreamt of, you will be effectively able to ground your vision into an efficient and actionable plan.
Assert Your Market Size, Growth, and Share
It goes without saying that most of the investors in the market have their own investment thesis and priorities when it comes to funding a new business. They invest perplexedly where they find that the return on investment or ROI would be considerably high. Now, you have to run a secondary market research and find out all the valuable information regarding your market size and its growth and share. This will help you in giving voice to your financial model where you can effectively boast of the major key benefits of investing in the market where you will operate your business.
Unique Value Proposition
Often termed as a unique selling proposition, it is important to be equipped with a unique value proposition for your business concept which includes your products and services. The reason why you should use the word “value” here is that you are viewing things from the audience’s perspective. Now, rendering value to your target customer means how much viable your solution or product is to solve their problems. That is why it is important to run a quality check and get some valuable feedback from some customers before looking outside funding for your startup. Make sure that you are outfitted with case studies and testimonials to prove and demonstrate this value in order to captivate the investors.
Focus on Single Product-market Segment
When meeting investors, make sure that you have prepared your strategy for your specific product-market focus that will be the building blocks for constructing your business. You can then outline a roadmap to enter other adjacent markets with your business concept or you can craft adjacent products to make the most of your existing product for servicing a larger segment of the net business with your target audience and market. In case you portray yourself as an individual who is looking to commit his or her services for everyone and everything, it will mark as a serious concern for your investors. Ensure having an initial target, make it exceptionally interesting and pitch it with a genuine roadmap filled with spectacular opportunities.
Articulate Your Sacrifices
Potential investors will always have an appetite to learn about how much you are going through to build your business; especially how much ready you are to make some of the biggest sacrifices to give your concept a run in the market. Investors find it very impressive when they get to know of the personal investments that you have already made to the business idea along with the developments that have been surfaced recently. Basically, they like to see how much you are in the game and facilitating your time, money, and effort to make this a successful campaign.
Ability to Raise Debt and Pay Off
If you have decided to run your business in an industry that requires a constant flow of cash, you will have to service debt which requires a lot of ability. Take a small business loan by acknowledging the key factors including your capability to pay off your debt and settle it for once and for all. However, make sure that you are taking important tips from a financial consultancy firm that will guide you whether you will need a small business loan or an outside equity capital would be enough for your business.
Negotiate the Right Valuation
While seeking capital for your business, you will get to know terms like fair valuation and optimum valuation along with the major differences between them. Generally speaking, it is always better to accept a deal at fair valuation instead of choosing to work with investors that add no value to the optimum valuation of your concept.
Hopefully, you are now clear on the various aspects to keep in mind when looking for the financing options for your new business. Choose the right funding source with these tips that will be beneficial for both you and your company.
By Marina Thomas
who is a marketing and communication expert and helps clients in long term wealth plans.