How do you pitch for finance to get funding for your start-up

05 August 2009

Government officials may be trying to tax small business into extinction, but that doesn’t deter the many thousands of individuals with dreams of becoming small business owners. Unfortunately, not many people planning to go into business have enough money to get started.

Even something like a website business can take thousands of dollars to get going. When you’re dealing with an on-site clothing store, corner grocery, print shop, etc, the funding needed increases exponentially. If most had the money needed to start a business, ironically, they wouldn’t need to start a business.

The truth of the matter about businesses is they need to be funded by outside resources, such as loans from banks that specialize in just that. Knowing where to look, however, is only half the battle.

A potential business owner needs a careful “pitch” developed to maximize the chances of receiving the funding. It’s long and tedious work, but thankfully, it’s not very difficult. And if you’re looking to run a business, it’s essential.

Pitching your proposal or plan to potential investors is very important. One of the important things to do here is to anticipate the concerns or questions your investors might have, and thus address them with a view to showing how their participation can be beneficial.

In planning your proposal, you need to place a strong emphasis on certain aspects like the total investment required; terms that you’re proposing, i.e. shares, timescale, profits, etc; ability of the team to proceed as planned; the return of any and all investments.

You need to make sure that your presentation is as informative as possible, and also engaging and strictly relevant to your business idea. You may want to include business partners and team members to emphasize the strength of your business.

When presenting the idea, always appear to be enthusiastic about your position and the business’s potential; however, you never want to be unrealistic about the business or exaggerate possible results. Investors are looking for honesty, and a solid and lucrative opportunity always catches their eye.

Any investor is going to be much more likely to lend to someone who they feel they can trust. By presenting a clear and honest business strategy with no bells and whistles, you come across as the consummate professional, thus earning the respect and trust of your investors.

Many investors may be interested in collaborating with you and negotiating on key issues of your business, such as profit sharing, niche markets, exit strategies, etc. It’s important to remember that investors are expecting more of a partnership than your run-of-the-mill home or car loan. They need to be involved in the design of your business and know that they can trust it to operate.

Most investors are not only offering the startup funding needed for your business opportunity, but also their expertise. That’s why it’s always wise to choose a reputable lender, instead of, say, a wealthy family member for example.

If and when you have a solid proposal, seek out the top investors around and present them with an opportunity they can’t refuse. Be confident in your business idea and stand behind it.