Here it is: the scary stuff. Money. It’s what holds so many people back from pursuing their dreams, and that is so sad, because it may not be as difficult as you think. As I talk about in this episode of The New Entrepreneur, I didn’t have any money to invest when I started my current business! Get creative in looking for ways to finance your business, and make it happen. Watch the video to get some ideas on where you can go to get the funds you need.
Action Steps for Success
Are you ready to look for funding? Make sure you have the following pieces in place before you approach lenders or investors:
Get your personal finances in order
Get a copy of your credit report and check for errors and omissions. Angel investors and VC firms may not check your credit history, but banks certainly will. If there are late payments or other black marks on your report, be prepared to offer the bank a reasonable explanation of each issue on your report. With so many big financial troubles in recent history, banks are carefully reviewing all lending practices and trying to mitigate their risk.
Have a solid business plan
Can you prove the business is viable? Does it look like it will be profitable? Will it have sufficient cash flow to make loan payments?
Give proof of your skills and experience
Do you have the skills to build and manage the business? Investors and lenders will want to see evidence of your financial management abilities. If you’ve never owned a business before, consider how your education or experience qualifies you to run a business.
List your assets
If you’re applying for a bank loan, do you have enough assets that would cover the outstanding balance of the loan if you default on the payments? The lender may require a statement of net worth and a personal guarantee, which means that if the business cannot honour it’s obligations, you will be personally responsible for the repayment whether or not the business is a separate legal entity.
Target specific venture capital firms or angel investors
Do your homework. Angel investors may fund a variety of different businesses, but VC firms usually specialize in certain industries. Approach firms that fund businesses like yours.
Find a corporate finance attorney who can incorporate your business, and ask them to personally introduce you to appropriate angel investors or VC firms.
Ask. Ask. Ask.
Ask your current or previous business school professors for introductions to investors. Or if you personally know the CEO of a company which has VC or angel investor funding, ask them for an introduction.
Put the word out to your network that you are looking for investors. One of the most important thing you can do is put your intentions out to the world, otherwise, how will people know how to help you? And my belief is that others truly do want to help.