Ready to Raise Capital for Your Business? Think Again

Ready to Raise Capital for Your Business? Think Again

Over the years, we have had the opportunity to speak with a multitude of entrepreneurs. During our conversations, we inadvertently begin to ask them the same questions. One of the most important ones we ask them is, “What is the biggest challenge facing your business.”. The answer is almost always funding. We hear, “If I had the funding, I could start this business.” We know very well that finding funding for a business is a big challenge, especially in the early stages of business development. But if you start seeking funding before you’re ready, you’re likely to waste a lot of time; encounter much disappointment; and maybe even become burned out on your business. Before you go down that road, here are a few questions you should ask yourself to determine if you’re ready to raise money for your business.

 

Are you committed to the business?

Is this a thing you can’t, not do? If you aren’t inspired by your business idea and vision, it’s difficult to convince others to be a part of it; let alone use it. Not to mention, it doesn’t feel good to enter into obligations with investors if you are unsure you want to spend your time and effort on developing the business.

 

Do you understand your market?

At the core of your business, you are providing a product or service designed to solve a specific problem for at least a semi-particular audience. If you don’t deeply understand your audience, it’s difficult to create a sustainable business selling your product or service. Market research can help greatly in this area and is a must for the company to receive funding.

 

Have you validated your business model?

Having some sales shows there is demand for your solution. If your solution requires more capital to build and go to market, such as a physical product or technology platform, you can validate your business model through pre-orders or letters of intent to purchase the product when it becomes available. Nowadays, it is becoming rarer and rarer to raise funding without an M.V.P. (Minimal Viable Product).

 

Five23 - Beginning to Raise Capital

 

Do you have a plan for growing the business?

Whether it’s in a traditional business plan format or pitch deck, you will need to demonstrate to investors that you have a clear plan for how the business will operate and become financially sustainable. This shows that you have thought the business idea through, and have established goals and measurements of success. These growth metrics are key to any business; even more so if this business is to raise capital.

 

Do you know what you need the money for?

Investors want to know how the money is going to be used ; research and development, marketing, hiring, legal fees, creating infrastructure, or something else. They are looking at whether these expenses are likely to grow the business; if that’s enough or too much funding at this stage of the business; and if more funding is needed in the future to meet business goals. These items and many more are looked at closely to see how profitable the business will be for the investors; as well as how accurate the team is at making financial and growth predictions.

 

Are you ready to put your plan into action?

Investors want to see that you have the skills, motivation, and accountability to execute your plan. At the same time, they want to know that you are self-aware enough to see when you need additional support and are open to asking for and receiving feedback and assistance. To this point, don’t be afraid to ask for help. Humility is important as a new entrepreneur. While many investors will not invest their capital, many of them will be happy to invest their time; all you have to do is ask for it.

 

So, before you rush out to raise money for your new venture, take a second to see if you are up for it. You must understand your market, test your idea, and put in place a plan for success. Five23 is innovating through services that assist the process of organization and raising money. These services can be the first step you take toward success. If you wish to learn more about our services, please contact us via email: contact@five23.io or reach out on social media. We would be happy to answer any questions you may have.