Get a YES! How to raise capital for your business or idea
Before we get started, it is important to know that you need patience, persistence flexibility and resilience when sourcing for funds. I know it seems like a lot of grammar so in plain English, it means money doesn’t fall down from the skies. You need to earn trust to get it. Let me show you how.
1.Get investors on board. It is easier to get investors onboard for an existing thriving business. This means you already have a business but you need more money to expand the business. Investors generally will have more confidence to invest when you have proven you can run a business successfully. The biggest way to convince them is to make a fool proof business plan. Your business plan is the document that shows you are grounded in your business understanding. The business plan contains:
– the business concept and background: that details the industry, the major competitors, growth potential e.t.c
-The market: Here, you thoroughly describe the market that exists for your product or service.
-The product or service: Describe the product or service you are offering. What is important here is to identify your unique selling point. How are you different? How will your product deliver a better experience?
-Business strategy: How do you plan to win in the market? How will you sell your product? What channels? How will you create awareness? How does your price compare with the market average?
-The management team: what is the structure of your organization? What skill set does your team offer?
-Lastly, but crucial is your financial plan. This is the ‘koko’. How much revenue and profit will your business generate in year 1 and the next 2 years ? What is the capital needed for each year? What is the payback period for capital? This means how long will it take your business to generate enough profit to pay back the capital? These are the bare minimum. You can also add your balance sheet and cash flow projections.
When you present the plan to investors, you should be clear on what benefits the investors will get. Example, you should have a capital repayment plan where you commit to how their capital will be refunded. Also, you must generate some interest for the investor. Typically, an investor will demand for at least 12%-15% interest which is the average return that can be made from investments in money market. You can also offer some ownership opportunities in the company. Remember, nothing goes for nothing. All you need is to get a lawyer to document terms of partnership. It is better to own 50% of something than 100% of nothing.
2. Tap into funds from NGOs/competitions/government/entrepreneurs programs.
Information is power. Don’t be complacent. Consciously dig for more information. For a start, follow mrsceonaija blog, like us on facebook, follow us on twitter. We consistently bring you information about opportunities and funding. There is the Microsoft Lumia competition that just ended where funds are being given for brilliant business ideas, there is The Anzisha Prize, the Ignite business contest, the AYEEN program, the youwin program. This year, we’ve had 2 winners of $10,000 each from the Tony Elumelu entrepreneurs program. So these programs are real and E fit me you o! Keep pushing.
Watch out for part 2 of how to raise capital for your business!
Questions? Comments? Let us know!
Picture credit- financialjunetenth, goodenoughmother