test if working
For many businesses, generate capital may be the difference between success and failure. Most entrepreneurs overlook how much time raising money can take. Here are three things to keep in mind when developing your plan to raise money.
A common misconception is that raising capital will happen fast. Since you know your business the best, and you feel that you’re sitting on the next big idea, most entrepreneurs believe that investors will quickly jump on to work with you and make the business a reality. Take a break right there. Even if your idea is fixing a problem that many people face and would greatly impact the lives of many, it takes at least six months to close the first big round of financing.
Realistically, it could even take over a year. A suggestion for helping to speed up this process is to focus on raising small increments of capital. With this small increment, use it to build a prototype and get it to market. Conduct user testing, get feedback and make adjustments. When your idea has market validation, you can ask for a bigger investment.
Roll up your sleeves and dive in. Raising money can be a full-time job in itself. What I mean by that is put your idea in front of as many people as possible. I have found that it can take 30 qualified investor pitches to close one good deal.
Potential investors are busy people. You’ll do a ton of legwork just to get an appointment. Then you’ll have meetings canceled. Or you’ll arrive for a pitch, and find the investor is “no longer available”. Or you give the perfect pitch to your dream investor, and the answer is still no. Stay focused and keep your emotions in check. Even when things don’t go to plan, learn from the failure so you can do better next time.
Finding funding for your new business can quickly turn enthusiasm into frustration, confusion, and intimidation. After all, asking strangers for money isn’t always a great time; however, if you are patient, persistent, and willing to make mistakes, you will succeed in finding the funding you.
Here are three tips to help you on your way:
For most entrepreneurs, patience doesn’t come naturally. Be realistic, determine exactly how much capital your venture requires, and then take your time in raising it. It takes time for ideas to become capitalized – even the best of the best. Expect this process to last, at the very least, six months. In some cases, however, it may take as long as a year.
In a similar vain, raising capital isn’t easy. In fact, it’s a full-time job. For every 25 investors you meet with, don’t expect to “close” on more than one. That being said, don’t walk into every investor meeting expecting failure. Always walk into a presentation prepared for success. Eventually, you will find the right match.
Keep moving forward.
Again, raising capital takes time. In the meantime, it’s important that you keep moving forward. Be resourceful, and find ways to achieve amidst unideal circumstances. Both your business and your future pitches will be stronger for it. Investors reward resourcefulness – not just resources. They want to see that you are not afraid to move forward at all costs.
Simply put, persistence pays. You’ll hear “no” a lot more times than “yes”. Learn from those rejections, evaluate what went wrong, work to fix it, and then ask again. Investors reward determination.