Lack of capital is a major reason why many businesses are still ideas in people’s heads. The number of startup entrepreneurs who go to banks and venture capitalist to ask for funds is staggering. That means that getting somebody to open their check book for you is a tall order. While a concrete idea followed with a remarkable business plan and passion will get you the attention of an investor, these five mistakes might get you kicked out.
1. Underestimating the process
Many entrepreneurs underestimate the process of getting funds and the time it takes. From the time you finalize your business plan to the time you deposit that check, it can take more than six months. The process goes from preparing a killer pitch, identifying prospective investors or lenders, reaching out and negotiations.
If you had already started the business with the hopes that you will get more funding soon, you would likely run out of money before that happens. The best thing is to anticipate delay, rejection and lengthy negotiations so you can plan accordingly.
2. Ignoring professional help
Raising funds is among the most challenging things an entrepreneur can go through. Whether you are looking for investors or going to a bank for a loan, you need somebody with experience and expertise to hold your hand. Believing that you can do it yourself and save the legal fees, you would pay a lawyer is a huge mistake. At Opportunity Business Loans, entrepreneurs are connected with the most suitable lenders with an advisor to hold your hand through the process.
3. Focusing on the money
An investor can tell that this guy is just looking for cash and has no interest in who the lender is. It says that you will be ready to jump to the next gold rush and abandon ship. What investors want to see is somebody who has a passion and deep love for their business. The entrepreneur cares about who they are partnering with and who will bring more value to the company instead of just writing a check. Such love shows that you will ride and die with it and find ways to make it work no matter what.
4. Not connecting on a personal level
Preparing amazing slides and financial projections is all good when you are pitching. However, slides and graphs will not win anyone’s heart. It is your personality, passion, and how you are connecting to the investors that will win them over. Sell yourself first and foremost and then show them how you will all benefits. Make jokes, be lively and bring your personality to the business at hand.
5. Poor preparation
One of the biggest mistakes young entrepreneurs make is to underestimate how much money they need. They end up asking for too little and then get stuck somewhere along the line. Sometimes investors ask them a fundamental question about their plans and they have no answer. When preparing the business plan, you have to consider every expense, every angle and give leeway for unexpected stuff that can come up. You can carry out a business experiment to get your facts rights.
Getting capital may seem like it’s the ‘be all end all’ for business, but it’s not. You have to start somewhere with passion, hard work and dedication. Ask for advice from successful people and build connections that will be more beneficial in the long run than money.