For many small businesses and especially for start-ups, financing can be tough. Many major lending institutions are cautious about awarding credit to new operations that do not have an established operating history. Meanwhile, even venture capitalists and investors that specialise in new operations are often hesitant to invest some businesses - and that's most start-ups fail within their first year of operation.
For businesses looking to get investors, it means a lot of hard work for sometimes very little gain. Understanding more about what venture capitalists are looking is a good start. Here are some points:
Have a sound business plan - all investors and finance suppliers will want to see your business plan. They want to make sure you've done the research behind your business concept and can state your case as to why you believe your venture will be successful. Make sure your concept is supported by statistics and figures that demonstrate your idea is not only feasible - but will be successful!
Have a clear exit strategy - what many entrepreneurs often fail to demonstrate is a clear exit strategy and to show a potential investor how they'll get a good ROI on their investment. Investors want to know the end game.
Build your credibility - many start-up operations are looking to raise all of the funds they need to get their operations going, but the reality is that large sums are harder to secure. For many businesses, it'll be smarter to raise as little funds initially as needed to get the operations going and to start to establish your operation's trading history. You can always go back and ask for more funds later down the track.
Once your business has become more established, you'll find you'll have more options available when it comes to finance - including technology leasing on equipment as well cash flow finance on your invoices. It's makes sense to get you operations going as soon as you can - being prepared of course, will help you secure those first vital investment dollars.