If you are among the entrepreneurs wishing to grow or start a business with the help of other people’s money (investors, banks, firms, or grants) you must be able to answer the five following questions briefly, concisely, clearly, and compellingly. These questions help your potential financier assess risk and potential reward.
- How do you, or will you, make money?Multiple revenue streams are better because variety allows the company to stay afloat even if some products or services fail or take longer to succeed or cost most to develop and deliver than anticipated.
- How much money do you wish to raise or borrow?Company founders often assume that business is intuitive and easy. Nothing could be farther from the truth. Startup businesses are so fragile that a single miscalculation can be fatal. Common errors are not raising enough capital, over spending, hiring and corporate structure errors.
- What will you do with the investment or loan amount?
Do you need the investment for marketing, manufacturing, legal expenses, or operational expenses (overhead items like office, staff, equipment).
- How will you pay back the money and when, or how will the investor earn a return?This is really the most important question and should be the focus of your presentation and numbers.
- What experience do you and your management team have in this industry and with prior investor’s money or loans?Most entrepreneurs are not able to think like investors and avoid the common errors. Position your team as experts, specialists, and the company’s sales team as well as leadership.
Give compelling answers to the questions above and greatly increase your chances for funding! Questions? Email Mike Will Downey.