You have no doubt heard the expression, “Put your money where your mouth is.” This saying rings particularly true as a small business owner. If you’re open for business, it’s unlikely that you’ve started without a considerable investment of both time and money.
What that investment has looked like depends upon many factors, including the size and type of your business, and your own financial resources. The cost to start up and maintain a business (never mind grow it) can be prohibitive. And your resources are finite. So how should you approach the process of securing additional capital for your business?
If you don’t ask, the answer will always be “no”.
Be prepared to ask for assistance. Then be prepared to hear “no” more often than you might like. You will also hear “yes” when you speak out about your big vision and goals. Some folks will like what you’re selling or the services you are providing. Other people will just be excited to have the opportunity to support you in your efforts. Give them that opportunity.
The best way to warm up? Ask your friends and family first. They afford you the perfect opportunity to nail your elevator pitch. They’re also obligated (for the most part) to still like you, even if they don’t like the idea of opening their wallets. But remember, the people who give you capital are investors, even if they are related to you. Make certain to be professional and to treat them the same, at least as far as your business goes, as you would anyone who was investing in your business.
If you have a plan in place, you have a greater chance of raising capital.
Unless you have a particularly business savvy family member, Mom is not likely to demand a copy of your business plan before writing you a check. The same cannot be said of banks and traditional lenders. They want to know that you have more than just a great idea. They want to see your game plan. Where are you spending money? What expenses do you anticipate? What is your growth plan? And most important, how would you use the additional capital you’re seeking? What value would it provide to your bottom line? If you can answer these kinds of questions, most of which would be addressed in even the most basic of business plans, you increase your chances of securing small business loans.
If people know about your business, they’ll be more inclined to back you.
Who would you be more likely to entrust your money to? A business you have never heard of or one you know people are talking about? The one that’s on people’s radar, right? So put yourself on people’s radar! Word of mouth is free. Social media gives you instant access to a larger audience than you could ever reach handing out flyers. Building good will in your community costs you nothing. You don’t need a big marketing budget to create a buzz about your business. And when people are talking about you, you are more likely to catch the attention of others who might be willing to invest in you and your work.