Raising Capital is Not Just About Money

If you’re running into snags or having a hard time raising capital to fund your business, you could be doing something wrong. Perhaps you should stop thinking banks and start thinking people instead.

Many lending organisations have made business loan conditions quite restrictive, creating a real problem for many small business enterprises.

Unfortunately, the reality is that very few businesses, even if they’re operating with good margins, can continue to grow without access to capital. Costs will simply keep rising. Costs like equipment, labour, rentals, permits and regulations have a way of piling up quickly, you’d find yourself short of funds at a time when it’s most needed.

Without a good understanding of how networking and building relationships can impact on business capital, small business owners will have to depend on hard-to-get commercial loans and other short-term funding that often come with high interest.

If you haven’t started running your business yet, or if you just happen to be at the starting line, now is the time to start finding those people who will matter to your chances of success. 

Approach former associates

If you made money for another person (or business) in the past, feed that relationship. Cultivate it for all its worth. Keep in mind that this is not just about them supporting you with funds (although, of course that would be great too) but rather, it’s about leveraging their connections to build your network.

Approach these people and tell them about your business venture. Remind them of the once successful association you had with them, and then ask for advice on your new business concept. These guys have a big sense of self-worth. Asking for advice is a great way to massage their egos before asking for money.

Know potential investors

Identify people with money to spare and who might have expressed interest in your industry. They’d usually be the ones who had invested in some of your competitors or may themselves have owned a company in the same field.

Remember, these are people most likely to invest because they like putting their money into a business they understand.

Be at industry events

These are not just good places to see and learn about the latest trends. They’re also excellent places to network for investments. Frequently, it is in these events you’ll find investors possibly looking for new players. They’re prone to be receptive therefore to your funding pitch. It’s to your advantage to attend as many of these events. Make sure though that you’re well organised.

Prepare some information packets with your business card, so they’ll know who you are, and what you do. Be bold but friendly. Ask for advice not money. That could come later. You’ll be amazed at how many people will be willing to share their time and experience with you.

Getting investors to put money into your business can be challenging but, it’s doable and in today’s situation where access to bank funding has become so restrictive, this may just be a great alternative.




email ih@ihgroup.com.au

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