Securing funding for your startup business can be a tough hurdle to overcome. Thankfully for entrepreneurs, there are now several options to choose from.
The cost to start a business is at an all-time low and more than 90% of startups are self-funded. If you can do it all yourself you end up with complete control and all the equity - an ideal situation!
However, a great idea and a solid bank balance don’t always go hand-in-hand, so here are some other options.
In exchange for funding your startup, investors will typically require a portion of the company or stock, or a guarantee that they’ll receive a percentage of the profits. The first step is to work out how much capital you need, how many investors you can take on, and what you’re willing to offer them in return for their money. Then it’s time to work on your pitch.
Keep in mind that this is not step one – many professional investors will want to see that you have secured non-personal funds from family or friends, as this shows credibility.
You’ll need a great credit history and solid business plans, included financial projections, but you may still struggle to secure a loan for a new business unless you are willing to put assets on the line.
However, if you have a partner or an interested customer, there is the option of getting an advance in the form of royalty payments, early licensing or white-labelling agreements.
A customer or business that sees value in your ideas may be able to offer an advance on royalties, a white-labelling agreement or early licensing.
Universities, large companies and community development organisations sometimes offer incubators and accelerators for startups, providing resources including mentoring, office space and seed capital at little to no cost.
A relatively new source of funding a startup, crowdfunding campaigns allow entrepreneurs to reach out to a likeminded audience who are interested in investing in their product or service. Although altruistic crowdfunding isn’t unheard of for charities and individuals, you’ll likely need to offer something in return – think first-release products or special access to events.
Government support and community assistance are other ways to fund your startup. They can be highly competitive and involve a lengthy application.
This sort of support may also come from large businesses – Salesforce for Startups is a free program that helps startups access resources and Salesforce products to get started the right way and grow quickly.
If you get the opportunity to pitch to prospects, lucky you! Here are some quick tips:
Don’t ramble about everything you could do. Focus on how you will be able to help the prospect or your potential customers face their challenges.
When someone wants to interrupt, let them – they obviously need more information on a specific point to make their decision. They might let you know through their facial expressions or small gestures, so be on the lookout for small signals.
Don’t lose their interest – keep it short, focusing on the most critical aspects.
Ask for feedback throughout your presentation. Ask ‘does this make sense for your world?’ or ‘Could you see this applying to you?’. They will either give their tacit approval – beginning to softly close the sale – or they will ask for more information, giving you an opportunity to adjust your offering, making sure your presentation has been absolutely relevant.
To learn about the digital landscape SMBs are operating within and how to make the most of enabling technology, download the Digital Opportunities for Today’s Small Business report.