Tips for Raising Capital
Avoid it if possible: To start with it might be a better option to run your business part-time and try and fund it from early revenues. If you can arrange to pay your suppliers a little later then you can utilise the money from your customers to its best effect, for example raising unsecured bank debt. This is a better solution than financing yourself through banks, venture capitalists or angel investment. These will have a bigger cost to your business in the long run through higher interest rates, taking more control or requesting equity dilution.
Be realistic: It can be really hard work to source money from investors so the key is to go into it managing your own expectations.
Use your connections: Who do you know that could make some introductions? Some of the best business opportunities come from introductions through friends. People buy from people as much as the business idea, so make sure you are credible. The best way to do this is have associates spread the word for you.
- Finding money behind the sofa: You never know where investment might come from; it could be family members willing to invest in you or a former colleague who was impressed with your work ethic and business acumen. When talking about your business make sure you know the answer to every possible question. If you don’t feel comfortable in this kind of environment, make sure you join forces with someone who can!
- Don’t make a personal guarantee on a loan, no matter how good the offer is. If someone is insisting on this, they don’t believe in your business plan. Try and rework it so that they will offer you it without the person guarantee.