Raising funds is a common experience to all start up entrepreneurs. It would have sounded nice to say that all entrepreneurs do this but that will not be true. A few of them have businesses passed down to them and they are lucky enough that those businesses are doing well. It does not mean they don’t need more funds to grow the businesses but they don’t have to go through the sometimes harrowing experience of raising funds for a startup.
Whether yours is a startup company or you are an aspiring entrepreneur, there are some things you will need to pay special attention to if you will ever have to raise funds. People sometimes forget the fact the problem is not always the unavailability of funds. Once some entrepreneurs try to raise funds and they are turned down by the prospective investor or creditor, they are quick to conclude that there is no money or that the bigger entrepreneurs just don’t want to help.
After a few refusals, one out of the many potential frustrations of businesses begin to set. The budding entrepreneur does not understand why people will not support his or her brilliant ideas. Some people give up on entrepreneurship from this point and a few others still move on. There are some things you will always have to put to consideration when you are trying to raise funds or if you are already in the process of raising funds.
To raise funds successfully, consider the following:
Relationships – There are a few people who think that the idea of connections and relationships are things common to African setting. You will be mistaken to think that it is in Africa alone that you need to know people before you can do businesses. It is important to state clearly that the relationships being referred to here is not a situation where you get business deals just because you know people even when you don’t have the competence to execute the business deals. However, it can be very hard to build a business without relationships. This is simply because it is easier for people to do business with people they already know. It boils down to trust that has been built over the years. Are you trying to raise funds, go to people you have built relationships with over the years. They know you and should not have issues with trust, compared to those who do not know you.
Clarity of purpose – That people know you does not mean they will just open their pauses or close down their bank accounts to help you. Before presenting any idea to someone, you as the custodian of the idea must have a clear picture of what you are about to do. In Africa, and in several other parts of the world, you will find intending entrepreneurs who want funds for their ideas but don’t even have a clear picture of the idea. Nobody will give you funds for something that is not even clear to you. So be sure your idea is very clear to you.
Strong communication skills – There are those who have a clear picture of their ideas and they know what they really want but cannot communicate this idea to other people. That is a big problem. You must be able to communicate your idea clearly to other people either in speech or in writing. People are wired differently so some people will find communication as an easy thing for them. If you want to go into business and you will be raising funds, you can’t leave the business of communication to the media professionals alone. You have to learn the art of communication. There used to be a TV reality show in Nigeria called the Dragon’s Den. Young entrepreneurs were supposed to pitch their ideas to a few judges who have vast experiences in handling different businesses. For most of the people that were turned down, their problem was the ability to communicate their ideas effectively.
When you take a look at a good marketing plan, business plan or proposals, you will realise that those documents are simply showing your clarity of purpose and strong communications skills. That is why investors or creditors want to be convinced through a document that you know what you are talking about before they release funds to you.
While the points raised above do not necessarily guarantee that you will get the funds you are looking for, they certainly make it easier to get the desired funding. If you go back into fund raising, armed with this information, you will see there is a big difference, compared to what you have been doing before now.