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How To Identify and Fund Your Business Startups

I have a wonderful business idea, I am looking for funds

You are unable to scale up your existing business because you lack big funds or  you are planning to start a business but do not have adequate resources to reach to the investors then read this post to help you clear your apprehensions.

First let me start with the basics so that you follow the right path, I follow up funding resources with the validation of your idea.

Also Read:

How to start a small business in india-full guide

17 top inspiring young Indian Entrepreneurs

How to register a private limited company in india – full guide 2018

How Important Is A Working Model For Your Start-Up?

Identify your talent

You do not need to learn management books or browse through internet for hours to discover talent within you. Trust me, you are a special individual with unique abilities that only one in a million has. You can do certain things wonderfully  that no one can in your area. Identify that behavior and work around it.

Let us have a brief check, are you passionate about this particular business or you have a long experience as an employee that is why pursuing it. You must understand one thing that anxiously started projects do not make a profitable company to sustain in a competitive market.

Review pattern of your work and area of interests. What you enjoyed most doing in your life. What you never left doing despite working for more than 8 to 10 hours a day. When you identify the pattern, make a plan around it and then start business on the derived concept; that you have been doing throughout your life.

When you review a pattern you understand you liked writing or teaching or singing or music or gardening or helping seniors or giving good advice to others. There is … this one thing that stuck to you. You do it somehow even in your busy schedule, there you go – start the business following that pattern otherwise you may not succeed.

A person who loves teaching can start his own training institute similarly an individual who likes gardening can start his own nursery. A word of caution also research on the competitiveness and market reach before finalizing your business concept.

My business

It is always exciting to have own business or become a partner in an existing business. There are a lot of things like planning, execution projectile and revenue generation methods that goes into business startups funding. After all, it is very difficult to have a business without convincing investors on funding.

How to get internal funding

Internal accrual

You are still not completely sold so you do not want to foray full time on your business adventure. You have a family to support and need time to understand the market and business to grow.

There is this popular method to fund the business. You work on a regular job and keep building the base of your business with your savings. You use weekends and holidays to push your business on your own.

Loans

Loans are the easiest and less time consuming method to fund your business startup. However you need excellent track record and higher credit rating score. Banks go through due diligence before giving loan.

Charity funding

If your startup is into charity or not-for-profit business then grants are good source of funding your passion. You should clearly inform in grant application your purpose of business and how it will help the society and public at large.

This is a lengthy process albeit the grants obtained are not required to be returned since you will be investing into public welfare schemes. If your business idea has a potential, you may incur profit even through not-for-profit business, provided it is scalable to the state level and other investors join in to boost your bigger dream.

Why funding fails

Let me discuss with you in precise – business startups funding mishaps that you should consider when creating your business plan and setting up your new business.

The majority of new business startups fail because there is a severe lack of funding after the business has already been set up. People fail to PROPERLY plan for three, six, or even twelve months down the road.

Unfortunately, the majority of new businesses do not start earning a substantial or even any profit until they have been running a minimum of two to three years. Yet the funding aspect is looked at the business startup and not the future. This causes many new business startups to fail.

Without proper planning they lack generation of revenue and gradual growth, this leads to a panic situation when they think of upscaling the company to increase their base, in doing so they hire people, only to realize later that they miscalculated resource necessity.

Later on downsizing is done on targets and employee strength following up with investors losing confidence on the business model itself.

How to get external funding

Get social

Join business network groups; online and offline. Network with like-minded people from the same sector. Attend conferences, trade fairs, seminars and workshops to meet investors and peers.

Talk precisely, to the point and be direct when you meet the investors personally in events. Dress up smartly, project yourself as an expert professional of your field.

Remember one thing –  DO NOT SHY TO PITCH YOUR BUSINESS CONCEPT when you get chance to converse with them. If you shy and do not believe your own business idea then do not expect others to have faith on it too. The positive energy and enthusiasm about your business concept should be felt by the investors.

Judge their response with the conversation, if they seem to be disinterested, talk about emerging trends of the industry.

And when you find them quite keen to prolong the discussion, grab the opportunity and seek time to meet them in their office for the presentation.

The presentation

Your pitch deck must contain three slides

a) Your passion to do this business along with experience

b) Clear and simple metrics on projected financial and operational results

c) Your team’s background and experience

The presentation should be started by you then your founding members and primary stakeholders.

To make a presentation successful

I) Give examples

III) Use images; speak more with gestures and passion

III) Treat investor as your customer and how they will experience your product/service

And when they are ready to show interest in your business, send official email from your business id on immediate basis thanking them for giving an opportunity.

However do not end your search after they agree, pitch other potential investors and look for better options. Check out how interested they are in your concept – whether they are looking for 3 to 5 years exit or annual returns from your business.

Contacting small investors

It is always recommended to validate your business ideas multiple times. In doing so, you get to know hidden flaws that you overview due to overtly biasedness towards your business idea.

Though these investors may not invest in your ideas, the suggestions that they give help you in dealing with large investors with refined presentations.

Resource utilization

This is one of the important aspects of pitching your business ideas in front of investors. You must clearly provide details on management, recruitment, operations and marketing spends with respect to revenue growth.

Mind it that proper allocation of resources and spends is the key factor in knowing how good leader you are in managing a business. It is just not an idea but also leadership quality that investors see when they go through your pitch deck.

Also Read:

7 Most Effective Ways To Think Like An Entrepreneur

How to Select Right Co-Founder for your Startup

10 Rules for a Great Startup Idea – Read to Avoid Failure

7 life lessons from Entrepreneurship Journey

Make it visible

People believe easily if you make it visible to them. It is good to have a founding customer base, they could be your family members, peers, ex-colleagues, friends or in-laws. Try to reach at least 100 odd customer base and accumulate the volume in a month’s time.

Approach the investor and inform them that you were able to reach the customer base with your sheer hardwork and networking skills, there is no shame in revealing transparently to them that these customers are your own people whom you knew personally – If they ask you the success mantra.

I have seen few business men actually skip this and sugar coat it as their selling skills.

Visibility of customers showing interest in your startup business invokes interest among investors.

There is healthy competition and investors are checking out many ideas around. You have an added advantage over others as you are showing real customers while others are seeking investment on project plans.

Confidently showing proofs that your idea is working and need investment to scale up help in convincing investors.

Partner or just an investor

When you pitch to investors, ensure that you hard sell your idea. You must insist that investor should also spend some time with you on refinement of plans and actionables. You are not looking for just an investment but long term association and serious partners.

Investors agreement to join as a partners (even for a small duration) help you in building your networks and industry connections which you and your team of experts lack.

What you seek is what you gain

Never shy away from big numbers. If you think your project is scalable to a billion dollar business. Showcase it in justifiable metrics. Clearly set contingency factors of your business.

Suppose you are into agricultural products then consider seasonality elements of rainfall or flood or drought to pragmatically project drop in sales accordingly. Do not confuse investors with opaque sales figures. Remember to inform them that right now you need minimum funds to fuel the dream project.

Connect to startup accelerators or incubators

I recommend joining startup accelerators to multiply your seeking opportunities to manifolds. Though joining accelerators does not always assure that funding will be available it however smoothens the process to obtain time and interest from investors.

Let me give you an overview of what is startup accelerators or incubators. They are institutions that groom startups to get success.

Startup accelerators drive startups with their expert skills in terms of mentorship, advice, development, management and resources to help the startups reach their goals.

Accelerators organize a Demo Day, an event to arrange meetings of investors and startups. In this event, a series of pitch decks are presented by startups to investors. It is easy for investors to select an idea that wins their heart and mind. Investors look forward to such events and startups can conveniently present their pitch deck in a formal manner.

The major difference in accelerators and incubators is that incubators offer dedicated office space to support startups while accelerators only give skill based support without any office.

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