Need funding to grow your business? Here are 10 tips on how to raise money from experts at our Access to Capital events:
Strength in Numbers
Don’t go it alone. There are an amazing number of people and organizations who can help you grow your business and access funding. Establishing a personal relationship with your local lenders can also be key — the more they know about you and your business, the more likely they are to trust you with their money.
“Don’t underestimate the power of the network. It could be your neighbor or your accountant—feel free to approach them.”
“The most important thing when you’re looking to get a loan is to build a relationship with a banker that knows you. Let them in. Invite them to your business. Help them to understand how your business works so that they can come to the table with you and offer up suggested solutions for your problem.”
“Our data shows that those business owners who received support from the nonprofit organizations had growth that was 30 percentage points above those who only received capital.”
Be Flexible, Forthright, and Focused
One of the most important factors lenders take into account when evaluating loan applications is how much they trust the applicants. You can help inspire this trust by having the right attitude during your lender meetings. Showing the banker that your open to constructive feedback, have clear and concrete goals, and are open about both your strengths and weaknesses can enhance your credibility.
“If you’re bullheaded and just say this is my idea, just give me money, you’re going to get one-thousand doors slammed in your face, but if you will listen to the feedback…if you are willing to make those adjustments then there are folks locally who are willing to take chances early on.”
“The more focused you are when you go in to talk to a lender, the better the whole process is going to be…Be focused on what you want to do, and what you need the money for, and how much it’s going to cost for a piece of equipment.”
“So many people come to lenders and are afraid to say they’re having a problem…and some people are reluctant to be forthright with what is going on. You have a problem identify it…that gives the finance company or lender much more comfort in doing a deal.”
Ready for Research?
One of the top reasons why lenders say they turn down or delay funding applications is a lack of preparation. When you’re getting ready for a lender meeting, making sure you have all of the necessary records and financials in order is an important first step. Equally crucial is really understanding both who you’re presenting your application to and how other factors — like your industry’s environment, competition, and your company’s business strategy — may influence your business’s success.
“I don’t think we would invest behind a company that did not do some sort of due diligence on us as well. It is a red flag when someone is no doing diligence on us when they are going to take our capital.”
“You have two types of competitors: those who you compete with today and those who you may compete with tomorrow. And if you don’t know those, then you don’t know your market, and if you don’t know your market, then you don’t know your product, and if you don’t know you product, then you don’t know what you can sell it for, so then you really don’t know your business.”
Join the Crowd
Crowdfunding is one of the newest ways companies can raise money for their businesses. It can be a very effective approach, especially for businesses with tangible consumer products, because it allows you to appeal directly to the people you’ll be selling to for your funds. However, it also means that your presentation needs to focus on marketing your company at least as much as on your business plan and financials.
“I think the great thing about crowdfunding is that it gets you to organize your social media tools. I think having a video is something that every small business should have.”
“[Crowdfunding] Teams that have 4 or more people raise on average 80% more money…you have a combined power of all of the networks feeding into each other. We found that if you have a campaign with a video you raise on average 114% more money than a campaign that doesn’t. The video doesn’t have to be that snazzy.”