Starting a business as a female entrepreneur is not an easy feat by any means, especially when it comes to finances. Self-funding can only go so far – even with healthy returns from your business. With so many fresh entrepreneurial ideas surfacing during COVID-19, the race to attract investment has intensified, particularly for those not able to self-fund in the long run. Here are six tips to attract the investment you need when you need it.
Tip 1: Know the problem that you are solving.
There are several ways to get ahead of the game when it comes to securing funding for a new business. The first point of focus should be to hone in on the solution(s) that your brand provides to a real problem. A brand is bound to be successful if the target audience is currently looking for a solution that it solves.
It is important to note that building a brand for a local community is not enough to attract investors – who would want to invest in a company that has a limited audience? Efforts to understand how a global audience can be reached with the product do not go to waste if it means the brand can get external funding to keep growing. Investing in a market research campaign prior to developing the product would help build a strong foundation for the product to excel long-term.
Tip 2: Have a solid business plan.
Having internal processes and a reliable business model in place is a must for any venture seeking funding. Questions from investors cannot be avoided, even if they point to any minor details. This is fair, considering they are putting not only their money, but also their trust, in you and your venture. Entertain all questions – but also ensure that the business plan is airtight with minimal room for doubt. A simple yet detailed format is required to keep investors interested. It is imperative to include all the key points in an executive summary, so that it can be easily understood. Incorporating numbers that show success of your business to date, as well as any future assumptions, is also crucial to attract and maintain investor interest.
Tip 3: Maintain a solid financial forecast and positive cashflow.
A good financial track record and plan is likely the most significant pillar in building a business and attracting investors. Setting up a financial forecast helps to understand any patterns in cashflow and spending. This should be set up to be completed monthly for a year or two (at least) as it would help predict seasonal fluctuations in finances. A financial forecast is simply another asset that shows professionalism, drive to succeed, and promise of the product to investors. At the very least, a basic balance sheet, profit-and-loss account, and cashflow statement are essential to present to investors.
A key, yet obvious factor to account for is how well the product will do to make money through customers as opposed to investors. If a product relies solely on investor funding, it isn’t fit for the market. There needs to be proof that the product can sell in the real world. This not only helps to build a reputation for the product, which in turn lures investors, but also shows potential sponsors that their trust in the product is not misplaced. Furthermore, acquiring customers will provide a chance for real feedback – be it positive or negative. In essence, it’s free and real-time market research!
Tip 4: Get to know your investors as an extension of your team.
Although it can be tempting to see investors as walking capital, it is important to get to know them and their view of the product. Should they have any criticism, take it into account and incorporate it into future strategies and proposals to strengthen your defence. They will question everything you propose, so be prepared toconfidently answer or courteously take it on the chin. It will benefit the business in the long-term, despite the feeling of dejection in the moment.
Tip 5: Communicate with your investors.
Keep your investors in the loop – update them on the status of funding, how fresh capital will be used in the business with an explanation of how it will attract customers, and where you expect to be before closing a round of funding. The transparency helps develop investor trust and manages expectations.
Tip 6: Don’t forget your marketing and PR strategy.
Get your name out there! The purpose of this is to attract investors, not approach them. A strong marketing and PR strategy helps if you wish to be recognised in the industry. Building a reputation puts your business in a position of power and gives you leverage with investors.
Alongside securing funding, there are several factors to consider when starting a business. From building a minimum viable product to forming the A-team, it is crucial to keep on top of the minor details to ensure that nothing slips through the cracks. Joining an accelerator program gives developing companies access to knowledge, network, mentorship, investors, and other support that can help you grow.