Finding start-up capital for your business takes energy, time, good negotiating skills, and unflagging perseverance.
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If it were easy everybody would do it. Here are a few tips on raising money that might get help you get started:
- Start With a Good Business Plan. You cannot raise money if you can't articulate what you are going to do and why you are going to succeed. You can find many sample business plans in books and on the web. Write a business plan and define your use of proceeds for your funding round.
- Consider Bootstrapping. It's amazing how creative you get when you don't have funding. Where there's a will, there's a way. Sell your product before you've built it. Do whatever it takes. If you can avoid looking for funding, you may find you never need it and can keep more of the company to yourself.
- Don't Limit Your Options. Make a list of capital sources, including friends, family, private-equity investors, banks, credit cards, customers, government programs and venture capitalists. Prioritize your list as to what the best source of funds is for your business and start at the top.
- Go for Blood Money. Borrowing money from family is a tried and true approach to launching a company. Just make sure your family members or friends understand the risks involved and are willing to lose everything if it comes to that.
- Raise Money from the Right People. Don't bother wasting your time pitching a retail concept to an investor who only invests in software companies. Do your homework up front and find investors who invest in businesses like yours.
- Focus on Local Investors. It's unlikely that you will get an investor from the other side of the country to invest in your business. Focus on local investors. If you're in an area that is devoid of investors, it may be time to move elsewhere to pursue your dreams.
- Make Progress While You Wait. Sometimes investors will ask you to stay in touch and keep them abreast of your progress. This may sounds like a blow-off but it's not. If you report back to them in a few months that you've finished your product beta or landed a few big customers, they may then decide to invest.
- Take Their Feedback. If you talk to investors, you'll get feedback on your business idea. If you hear the same thing a few times, take those comments seriously. Smart entrepreneurs are agile and adapt quickly. If you need to change your approach to please investors, it could very well be worth doing. Keep Your Eye on the Prize. Don't let looking for money tank your business. If you spend all your time begging for money, you may not make any progress. It's a great idea to have one of your partners in the business focus on fundraising while the other partners focus on growing the business.
Some final words of wisdom….
Once you make your millions don't be stingy. Write a check to a young entrepreneur and give them a chance. Everybody needs a lucky break now and then. Keep at it, and you'll get yours.