Funding is the reason many business ideas haven’t taken off.
It’s the reason many promising businesses that should be growing remain stunted. Even several big companies too want to raise more capital.
Whether you’re looking for less than $10,000 to develop a prototype or start up your business, or you’re hunting for $15 million to scale and expand your product, there’s one major question that goes through your mind when you’re trying to fall asleep at night, or awake to a new day in the morning:
How exactly can I raise the funding I need for my business?
Because of how hard it can be to raise funding these days, we ogle and celebrate those ‘lucky’ entrepreneurs who successfully attract capital. After all, if they can raise capital when thousands of others cannot, luck must have played a huge part in it, right?
Yes, you’re right.
But you’re also wrong!
Through my personal struggles with raising funding, and my observation of over 100 entrepreneurs who have successfully raised capital for businesses at different stages of growth, I think I know why these guys are ‘lucky’.
There is actually a method to raising capital. And with some luck, this method will work for you as long as you follow the steps I’m about to show you, and abide by them.
Since raising capital is often wrapped in the myth and mystique of high finance, I’m sure some of you reading this would be expecting to see some complex and jaw-dropping formula that will magically show you the answers you seek.
But no, I’m so sorry to disappoint you.
While I have a penchant for snazzy formulas given my background in consulting, accounting and engineering, the method I’m about to share with you is quite simple.
But don’t be fooled, it’s absolutely powerful too going by the kind of results you can achieve with it.
This method is actually built around three strategies. Like hunting wild antelopes or positioning yourself to attract a dream job or a beautiful girlfriend, to successfully achieve any goal in life, you need effective strategies.
And raising funding in an environment where thousands of other people are looking for the same capital as you, it’s very important that you have a winning strategy that sets you apart and bests your chances of attracting the funding you need.
So what is this method of raising funding all about?
This method is about 3 inter-related strategies that any entrepreneur around the world can combine to achieve interesting results.
The first strategy is your preparation and positioning strategy.
The second is your packaging strategy.
And the third is your promotion strategy.
And I’ll take you through each of these 3 strategies in the rest of this article.
1) Preparation and Positioning Strategy
Every military general knows that preparation is key to winning every battle. With an effective preparation and positioning strategy, a small army can overwhelm and defeat a larger and more intimidating adversary.
While raising capital for your business is not war, it’s actually quite close.
In fact, raising capital is a selling process. That’s because you’re trying to convince other people to buy into your idea, vision or business, and invest their hard-earned money into it.
And I have found that your ability to communicate your idea, business or vision in a very convincing way can significantly increase your chances of raising funding.
What I find is many entrepreneurs who are looking for funding just want money to ‘develop a prototype’ or ‘grow their businesses’. While these needs are very genuine nonetheless, they’re actually very vague and will hardly convince anyone.
What kind of funding are you looking for? Equity, debt or free capital (like grants, prize awards or informal funding)?
Do you know the options available for the kind of capital you’re looking for? Do you know their requirements, questions and criteria for investing in or financing businesses like yours?
How much capital should you really be asking for so these investors and lenders can take you seriously? What’s in it for them? Why should they invest in, or finance your business?
The truth is, targeting the top sources of funding for your type of business, industry and geography is one of the best ways to prepare yourself for funding.
Unfortunately, many entrepreneurs adopt a ‘machine gun approach’ to funding. They send out their business plans and proposals to everyone and everywhere in the hope of attracting funding. While this approach works sometimes, it fails most times.
What you need is a ‘sniper approach’. You need to intentionally target those sources and options that are more likely to fund your type and category of business. As you may already know by watching action movies, snipers can be highly effective on the battleground.
In my upcoming free online course, I’ll be introducing you to the Top 15 sources of raising funding for any business. I’ll show you their good sides and bad sides, and how you can find, prepare for, and target them.
Sadly, when most entrepreneurs share their experiences with raising funding, they typically talk about banks?
On my list of top funding sources, banks are #14. While banks are the most familiar option, they’re not suited to funding all types of businesses. And I’ll tell you why in the course.
2) Packaging Strategy
Anyone who’s ever been in a supermarket knows just how powerful and influential packaging can be.
Everywhere you look in a big supermarket, packaging strategies are at work. Most consumer-focused businesses use a combination of color, lighting, texture, smiles, gestures, scent and sounds to attract you to their products, and ultimately influence you to like it and buy it.
These beautifully-packaged products are designed to get your attention because they know there are other products that are also vying for your attention. Worse still, they know most buyers have a short attention span, so they have just a few seconds to catch your eyeballs.
Investors and lenders receive a lot of solicitations, business plans and proposals in their email, in the post, and in person every day. Sadly, most of these are never read and end up in the trash. You can’t blame these busy professionals; they have a lot of work to do.
So, whatever you have to say to these guys – whether in person or via email – you have only a few minutes to catch their eyeballs.
These days, everybody follows the classic route of writing a long, boring and ‘academic-style’ business plan.
Really, who’s going to read through all those pages?
Am I saying you don’t need a business plan? Of course not. Nobody builds a house without a plan, so why build a business without one.
It’s really all about how you package it and when you introduce the business plan into the conversation.
Unless they specifically ask for the full document, before you drown a prospective investor, lender or partner in all the details of your business plan, you need to serve them a teaser or appetiser first. If they’re hooked and ask to know more, then you can serve them something more.
And who says a business proposal has to be written in words? These days, written words are the slowest and most time-consuming type of information to absorb.
In fact, images are really worth a thousand words.
Voice is worth ten thousand.
Video is worth ten million.
In my upcoming free course, I’ll also be sharing interesting strategies that help to package your vision, idea or business to be far more attractive and interesting to prospective investors and partners.
When it comes to funding, there’s a lot of noise out there. You need to package your business proposition so it sounds like music. That way, it filters through all the noise and investors want to listen to it. 🙂
3) Promotion strategy
In my opinion, I think the world is an unfair place. If the world were fair, all the best and brightest ideas shouldn’t have to struggle to raise funding. In a fair world, these ideas and businesses would ‘naturally’ find investors.
But again, the world is not fair. Even with the internet and social media that have made the world much smaller, it’s still not very easy for investors to find good business ideas and promising businesses to invest in. There’s just a lot of noise and distraction everywhere.
Rather than sit on your genius idea and hope the right investor finds you, there’s something else you should be doing.
Hope works, but not all the time. But taking action works most of the time.
You have to get on your feet and actively promote your business to the sources of capital you identified during the preparation and promotion stage. Those guys may be too busy or unaware to find you, but you can make it easy for them. Go out to them and reach them.
Don’t just wait until you randomly come across an opportunity for funding. Keep on applying! You should be signed up to the email newsletters of the organisations you’re targeting. Track them down on social media, and engage with them. Google and look up the people and decision makers on their teams and target them too.
Another very important point is to never give up due to rejection.
In the race for capital, there are only three possible answers you’ll get from potential investors and funders: Yes, Maybe, or No.
All of these answers are good for you.
Especially when you get a ‘No’, always respond with a ‘Why not?’ (of course, in a polite and respectable format).
It’s important that even when you miss the funding, never miss the lesson.
The critical feedback you get from these lessons will feed back into your preparation and packaging strategies and make your next promotion much better!
Raising funding is not a ‘win or lose’ game. It’s a ‘win or learn’ game. That’s the mentality and attitude you need when you’re in funding mode.
Remember, if you have a business you believe in, and you think you deserve funding, you have to actively promote it.
There’s no use having a good and well-packaged product when nobody knows about it.
Reserve Your Spot On My Upcoming Free Online Course…
Starting from the 1st October 2016, my free online course, Capital Attraction Secrets, goes live. Over 1,200 people from 60+ countries around the world have already reserved their spots to attend the course.
The course will be a series of 4 video lessons delivered over 5 days. It will be available online so anyone who has access to the internet on any device – mobile phone, tablet or laptop – can attend.
Here’s the link to reserve your spot: Reserve My Spot On The Free Course!
During the course, I’ll be sharing some of the top mental roadblocks that prevent most people from raising funding. I’ll also be revealing the top 15 sources of funding for most types of businesses, and real-life success stories of businesses that have used them to raise funding.
I’ll be glad to have you attend.
Here’s the link again to reserve your spot: Reserve My Spot On The Free Course!
See you inside!
PS: If you know somebody who’s facing challenges with funding, SHARE this article with them. They will be grateful to you for it
About the Author:
John-Paul Iwuoha is an impact entrepreneur, SME Business Coach, and founder of Smallstarter Africa. He works with entrepreneurs and investors to start up and grow businesses in Africa. He is also the co-author of ‘101 Ways To Make Money in Africa’, the widely-acclaimed book which reveals several interesting business ideas, market opportunities, and inspiring entrepreneur success stories across Africa. For the latest updates on business and entrepreneurship across Africa, follow Smallstarter on Twitter, @smallstarters