You have a great business venture idea and you are raising startup capital but why is that nobody wants to invest in your business? There is always room for improvement. There are several mistakes on raising startup capital that could be the reason why it is difficult for banks or for venture capital firms to invest on your business.
Robin Cross stated in her article that there are 3 groups of mistakes made when raising startup capital: “poor preparation, structuring the agreement and managing the money.” This is truly the reasons why entrepreneurs would find their loan applications and investment applications rejected. By avoiding these blunders, then there would definitely be a higher possibility of having a your business financed.
There are entrepreneurs thinking that enthusiasm and passion would be enough to start and keep a business. Unfortunately, if you are looking for a startup capital, investors are not only looking for proper attitudes, they are also looking for a complete and solid business plan.
When going to a meeting with bank or venture capital officers, you would like to be prepared with your business plan. This would show how important the venture it is. Nothing is more disastrous when an applicant files an application that has incomplete business plan.
You do not need just funds, you would also need management skills. Another common mistake is forgetting about the managerial aspects of the business. A bank loan grantor and venture capital investor are looking for something when they meet you, how you will return their money and investment. Nobody could be successful without relying or having somebody to help. You would have to get the best people out there.
Structuring the Agreement
There are surveys done by U.S. Bank in 2004 showed that there are small businesses who fail because they start with little amount of money. Most of the entrepreneurs who applies for starting capital are actually asking for the amount based on the best performance of their business. It is important to calculate the amount you will be needing in the worst scenario that could happen.
Others would commit mistake of actually not being too conscious about the legal agreements. If you are not confident with dealing with angel investors or VC firms, then it is for the best to get a lawyer that has experience about this kind of agreements. This would ensure that the terms would not be taking advantage of you and your business.
Managing the Money
Proper management is the key. It is natural to have difficulties on the first year, but overcoming it is important. There are entrepreneurs that would start a business just because of getting excited over it, but once they experienced a difficulty, they would let it go completely. When having difficulties with business, some entrepreneurs tend to keep the problem to themselves.
That is something you should not do! Look for people who can help you. Of course, there are mentors who are willing to help you out with your business issues. Asking for help or guidance is not a sign of weakness, rather it is about acknowledging your weaknesses and working to overcome them.
You do not have to build a fortress around your business, community involvement can help you get additional business contacts and at the same time impart your blessings and knowledge to other people.
Your business venture would benefit a lot from startup capital offered by different institutions. But it is not just enough to get the capital, what happens with money when it is already in your hands would decide what would happen to your business. Startup capital for your venture is just a boost.