Raising Capital – Fun and easy or a pain in the %*%$#? And yes, it is almost always hard work.
Some entrepreneurs find it very easy and fun to raise capital. Others are terrified at the prospect and feel like they’re begging, cap in hand. Either way, being properly informed and having the right mindset will put you in the best position to get what you need.
Getting clear, crystal clear on who the investor audience is for your company is KEY to successfully raising capital.
Are you in the start-up phase? That’s one kind of capital. This is the funding you will require to get all of your business operations in place, including supplies, payroll, equipment, marketing, insurance, and more. But it’s more than that. You also need to have a plan in place for future expansion. This is serious stuff. You really have to be methodical with your approach, and be sure to plan for the unexpected. The best rule of thumb is to make sure you ask for enough capital in the beginning or you might soon find yourself out of business.
Are you in an expansion phase? That’s another kind of capital. If you’ve got significant revenues and you’re looking to expand, restructure your operations or finance an acquisition, you’ll be attracting a different kind of investor. There are numerous elements to these scenarios based on what your expansion objectives are. Improving operations with new technology will need different capital than purchasing shares in another company.
No matter what kind of capital you require, planning is paramount. The process of gaining capital is quite involved, from banking and legal issues to insurance and tax requirements.
Don’t skimp on your capital-raising strategies. Research what you need to do, right down to the letter because errors will be noticed that can send you right back to step one. Know the capital you’re looking for. Know the kind of company who can provide it to you.
And, by the way, there is no begging involved. You have something investors want. Make it easy for them and deals will happen.