May 20, 2013
Entrepreneurs have a number of funding options available to them. From crowdsourcing to angel investors and venture capitalists, there are many organizations and individuals interested in backing startups. Businesses can avoid going into debt from high-interest business loans by securing funding through investors. As startups grow increasingly competitive, a new company must really set itself apart. Having a solid brand identity and mission and demonstrating cohesive goals are just the beginning. Take a look at these five ways to appeal to potential investors and get funding.
1. Build a solid business plan
As investors search for startups to fund, they examine which companies will be able to properly use any capital they receive. A solid business plan will go a long way in establishing a startup's credibility. Many new companies have a lot of raw energy, a pointed mission, and passionate talent driving new products. But often, there is a dearth of business planning. What areas of a business would benefit from new capital? Would funding go toward operations, expanding manufacturing, or opening new offices? How did a startup operate on its budget before an investor got involved? What are the operational costs, tech refresh plans, and long-term growth projections?
2. Future-proof your startup
While a new business may have products and solutions that are exceedingly relevant to current public needs, investors want to see how relevant a startup will be in the future. Does a startup have the talent and resources to grow along with their clients? Future-proofing one's business plans and products shows investors that a company is flexible enough to stay afloat. When there is no plan in place, a startup may generate a high amount of initial success and then crash. Understanding a startup's target audience is an excellent way to address their upcoming needs and desires. Marketing strategies should include social networking and community interaction to truly understand how a company can adjust to their clients' future needs.
3. Be upfront
Some startups are extremely shy about making their needs known to investors. Investors do not have the time or ability to dig through a startup's plan and identify key areas of need. Startups need to learn how to ask directly for financial help in order to receive it. New companies should clearly identify why they need funding and how they intend to use it. Investors want transparency regarding how a startup is using current funds. If an area requires funding, a startup must show how their resources are being allocated.
4. Demonstrate success
Startups must never be afraid to take credit when it is due. Any major accomplishments, successful product lines, and marketing campaigns should be showcased as investors learn more about a company. Having a track record of success can set a startup apart from their competitors, especially with industries that are flooded with entrepreneurs. Reporting should be clear, with specific numbers and results demonstrating growth and experience. Storytelling can also be a great way to demonstrate community impact, if a startup has contributed significantly to enriching their customers' lives.
5. Sustain investors' attention
While many startups are able to secure investors for their initial steps, they may have difficulty in gaining additional capital further down the road. Holding the attention of investors can be a difficult trial. Make sure to keep in touch with current and potential investors, leaving an open channel between decision makers. Be sure to update these contacts with company success stories and updated numbers. Tracking innovations and upcoming funding needs can be a great way to sustain interest, as a startup builds a positive reputation. Having a history of investment capital, future-proof products, and ongoing cash flow can help startups maintain investors' interest.
Guest author Drew Hendricks is a tech, social media and environmental addict. He's written for many major publishers such as National Geographic and Technorati.
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