We all know a busy mum who has started her own business. She probably funded it with money from her own pocket – what we call bootstrapping – and hoped it would eventually make a profit. But chances are, the business has either stalled or failed, or her profits are so small she’s ploughing everything she earns back into the business to keep it afloat. So how do you get a business up and running now and make money? The answer: Get your business funded.
A business idea may be great but you need funding to take it to the next level. Funding is when outside money is injected into your business. It is the most effective way to grow your company, hire more staff and reach more markets.
As a consultant and project manager for a leading accounting and consulting firm for more than 10 years, I covered financial institutions and MNCs all over the world, with a focus on Asia and China. During that time, I saw plenty of successful business ideas, including ones that reached IPO but so few of them were being led by women. It got me thinking, how can I help female entrepreneurs get the funding they need?
So, I started a crowdfunding platform for women, which later expanded to become Next Chapter Raise, Asia’s first funding ecosystem designed to help female business founders get funded — faster.
We’ve talked to thousands of women around Asia, and we often hear this question. When it comes to funding, where do you start? Here are our top tips.
Tip 1: Begin with the basics — what’s your business plan?
Don’t invest hundreds of hours and thousands of dollars into a new concept without doing the basics. A business plan can be just two or three pages long but it forces you to work out your idea and create a roadmap as to how you’ll get there.
If enough people like the concept, develop a minimum viable product (MVP) and test it. And don’t ignore the feedback either. Create a brand strategy. Consumers buy the “why” not the “what” or the “how” so know why you’re doing this business and what your company stands for.
The next stage involves research. Who are your competitors? What kind of market opportunity is there for your idea? How will you grow that market? What do you need money for? And how quickly could you provide a return on that investment?
These are just some of the questions an investor will ask before they invest in your business, so you need to know the answers.
Tip 2: Discover your funding options
Traditionally, women have self-funded their businesses but there’s lots of money for good ideas out there — you just have to know how and where to look.
In the “idea stage” of your business, you can consider asking for investment money from family and friends or even apply for a government grant — there are lots of these right now in the wake of COVID-19. Other alternatives are to get a business bank loan or enter a competition. These are relatively low-risk, small financing options – and they’ll be enough to get your idea off the ground.
Once you’ve grown the business and can demonstrate a decent cash flow you can then look at expanding or creating more products. To do this, you will probably need “angel investors” or ‘venture capital funding”
This involves larger sums and an “equity stake” in your business. Don’t be put off by some of these financial terms, they’re easy to learn. And don’t worry about finding an angel investor either. It’s like worrying about finding a publisher before you’ve written a book. In our experience, if it’s a good business idea word will get out – and an angel will appear.
Tip 3: Build up your knowledge — and your elevator pitch to investors
If you’re just starting out and you’re in the “idea stage”, start by familiarising yourself with funding terms like venture capital and equity stake. Then decide on your funding plans and what you need to prepare, such as research on your target audience, your business plan and your “elevator pitch”.
An elevator pitch is a short and snappy speech used to spark interest in a project, a product — or yourself. Imagine you walk into an elevator with an investor, you have 20 to 30 seconds to excite them with your idea before they exit the elevator. That’s your elevator pitch.
After that, it’s about answering their more detailed questions and the formal parts of the investment. If you’re raising money from a family and friends “round” your formal agreement can be anything from a handshake to a written contract.
Then consider practical elements such as building a team and coming up with a “revenue model” — how will you earn money and make a profit?
Simply by understanding this process, you’ve already moved one step closer to funding.
Tip 4: Build up your confidence
This is a big one, especially for women. You may be scared off by terms like “business plan” and “elevator pitch”. Don’t be. It doesn’t take much to get smart about funding but somehow women often lack confidence around this topic.
There’s a fear of losing control, answering to shareholders and “playing the game”. Some women even make the mistake of hiring a “male pitch man” to do their bidding for them. Don’t. Investors see right through that. Remember, they’re buying into you, your team and your enthusiasm as much as they’re buying into your product or service.
And like anything you want to improve, you get better when you have a clear plan and you practice — the more you do it, the better you get and the more confident you feel.
Tip 5: Join a community
Anyone who’s run a business will tell you a lot of success comes down to trial and error. That’s where it helps to talk to people who’ve already created a successful business and raised funds before. At Next Chapter Raise, we have community members who are just starting out, through to those with multi-million dollar businesses – but everyone is there as an equal.
In recent weeks, there’s been a lot of chat on our member forums about how to improve your chances when applying for government grants, the best ways to pivot to become a COVID-benefit business and how to ensure your product has the right features and market fit for the “new normal”.
And we don’t just rely on each other, we have experts in their field join the discussions.
This is critical, you need to hear directly from an investor about what they’re looking for — and mistakes to avoid. As an entrepreneur, it helps so much to have a safe and supportive space where you can ask questions and have them answered.
Tip 6: Develop a growth mindset – in other words, “think big”
You have to think big. Female entrepreneurs aren’t always good at this. Think of your business like your investments. The only way you can experience financial freedom is to invest what you earn, whether it’s in property, shares or alternative investments.
Look at it this way: Your salary is unlikely to double in five years but your investment property might if it’s in the right location! Your business is exactly the same.
Unless you’re prepared to invest a chunk of your own money every few years it’s unlikely you’ll be able to achieve significant growth on your own. You have to take on investment — whether it’s through start-up capital, debt or equity.
Demystifying that process is your first challenge, the second is acting on it.
The first thing to realise is there’s plenty of capital available out there for entrepreneurs. From government grants to crowdfunding, angel investors to venture capital, there is a funding option to suit every viable business.
You just need to start with the fundamentals. Create a business plan, an MVP and an elevator pitch. Then investigate your funding options and understand how the whole process works. At the same time, invest in building your confidence, find a supportive community and adopt a growth mindset.
Yes, it’s a long road — but it’s the only one worth driving if you want to build your own, highly profitable business.
Text: Nicole Denholder
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