Information For The Entrepreneur
Are you an entrepreneur, start-up or SME looking for investment or mentoring to help you
start or develop your business further? Find information and guidance here to help you be
successful at fundraising and a listing of investors looking to support entrepreneurs.
Tips to help you succeed at fundraising
- Make sure you know your numbers! Even if you are not a financial expert, as a business
owner seeking funding you should know the fundamental financial details of your company
and be able to speak confidently about them, including the following:
- Profit margin
- Sales (if relevant) over past year
- Gross profit
- Expenses
- Balance sheet
- Income statement
- You must have a good business plan or model. An investor will not be interested in your
proposal if you do not explain where you expect to take your startup in the next few
years, even if you have indicated there is interest in your product or service.
Here are some tips for formulating your business plan:
- Do not fail to relate how your product or service solves a real-world problem –
thus explaining where your market is and how great your market potential.
- Do not inflate your value or over hype your business, lay out facts: the
problem, your solution, the market size, how you will sell it, and how you will
stay ahead of competitors.
- Do not try to be all things to all people by explaining how your product can be
applied to multiple markets, most investors will prefer a more focused strategy.
- You must have a go-to-market strategy. Your business plan should explain your
sales, marketing, and distribution strategy. These key questions should be
addressed: who will buy it, why, and most importantly, how will you get it to
them? Explain how you have already generated customer interest, obtained
pre-orders, or made actual sales.
- Identify your competition. You may think you have no direct competition but
competitors, simply stated, consist of everybody pursuing the same customers.
This is also your opportunity to showcase your relative strengths against direct
or indirect competitors.
- Keep your business plan simple and not too technical. Document technical details
in separate white papers.
- Your business plan should not be too long, and be well organised. An ideal
executive summary is no more than 1-3 pages and the plan itself 20-30 pages.
Although there is no ‘correct’ structure, you should probably include the
following: Executive Summary; Background information if dealing with a highly
specialised field; Market Opportunity; Products or Services; Market Traction;
Competitive Analysis; Distribution and Marketing Strategy; Risk Analysis;
Milestones; Company and Management; and Financials.
- Include a risk analysis in your plan. Investors will want to know the risks
inherent in your business, and what has been done to mitigate these risks. These
risks could include those related to: the market, technology, operations,
management and legal among others.
- Do not make mistakes with your financials. Include enough detail, constructing
from the bottom-up explaining when you expect to make certain sales or hire
certain employees, then validate from the top-down, examining the overall market
potential with a comparison to the bottom-up revenue projections.
- Provide sufficient and realistic projections. Most investors will want to see
projections for five years and your forecasts should be credible and not
over-inflated.
- Be careful when offering a valuation of your company. This is normally
determined by the market - by what others are willing to pay.
- Avoid stylistic mistakes like poor spelling and grammar and being too
repetitive. The appearance of your plan also matters, make sure the pages are
well laid out, that the cover is attractive, the binding is professional, and
the fonts are large enough to be easily read.
- Make sure you invest enough time in formulating your plan. If you do not have
the time to devote to this, consider outsourcing the development of the business
plan.
- Make sure you seek an objective outside review of your plan, preferably from
people who understand your market.
- Make sure you present evidence that your start-up will earn money. Show that people are
willing to pay for your products or services through pre-orders or sign-ups.
- It helps if you have a track record of success, that you can demonstrate that you have
successfully run businesses previously.
- Only pitch to investors in your industry. They are more likely to understand where you
are coming from and to have contacts in your field that can help your business grow.
- Ensure that you have an overall plan, that you have already conducted plenty of
research and development, explored your target market and know enough to intelligently
forecast the success of your future business.
- Be aware of your competition. An investor probably will not be interested in your
product if it is a replica of what is already out there. You need a unique angle to
ensure that not only an investor sees promise in your product, but also that customers
will want to buy it.
- Show that you are willing to help yourself. Investors want to see that you are making
every effort to promote your business, grow your network and increase sales, this will
make you more attractive as an investment.
- Develop a strong marketing strategy. When you are selling a product or service you need
to have a plan for how to promote your product, boost sales and gain a competitive
advantage.
- Target the right investors for the stage your business is in.
Reasons your pitch may fail
- You have not provided any evidence that there is interest in your start-up and proof of
your potential success is missing.
- The investor does not trust you. Investors need to trust your character, judgement and
leadership skills or they will not trust your ability to succeed.
- Your team is inexperienced. The investor may like your idea, but not be confident that
your team is qualified or experienced enough to complete tasks, meet deadlines and
follow through on objectives.
- The founder or CEO is uncoachable. If the founder is not willing to listen to advice or
suggestions and is defensive when an element of the business is criticised, investors
will not work with you.
- Your company is not unique or you have not tried to create something different beyond
what the competition has
- Your start-up costs are too high and you are wasteful with money. Investors will be
turned off if you are spending too much on promotional key-chains and the like or paying
yourself a large salary.
- Your company's technology is already obsolete. Business trends move fast, investors will
not risk their money on something that is outdated or soon.
- Your company is too slow to launch a product. The longer it takes you to launch a
product, the longer it takes for an investor to see a return on their investment.
- You are being secretive with the investor. Investors need to know at least the basics
about your start-up to make an informed decision about investing.
- You cold-called an investor. Do not just contact every investor you come across, many
investors will only take referrals or recommendations from people they trust. List your
business on this site so investors can find you!
Ultimately you should remember that investors are business people too. They expect you to always
show integrity and respect for their position, just as they respect yours, since they were
likely once in your situation. They probably will not respond well to large egos, failure to do
your homework or pressure tactics.
Persistence and passion are seen as virtues by investors, so rejection should be only a
temporary setback. Take feedback constructively, review and make adjustments where needed and
try again!
