Everywhere I go these days, be it to Networking meetings like Business Engage (www.businessengage.co.za) or onto FaceBook or Destiny Connect (www.destinyconnect.com) or any of the many other sites that I contribute to, I hear the same story over and over again. The story of “I have this brilliant concept, but I need funding – where can I go for funding?” Sounds familiar doesn’t it?
So why is it so difficult to raise funding for your brilliant new business/concept/idea/product/service (insert whatever you like here)? Well apart from the fact that you probably haven’t done your research properly or perhaps you haven’t done a Business Plan and often you don’t have any collateral, one of the biggest things is that you are trying to raise capital for your business before you have any paying customers! Actually it is as simple as that.
The reality of the situation is that investors won’t be interested in your business or your ideas until such time as you can show them that you have got clients who are willing to buy and pay for whatever it is that you are trying to sell – until you have buying customers in place all you have is an idea or a dream and investors are in the business of business not pipe dreams.
Think about it logically for a moment and without emotion – you can theorize and pontificate to your hearts content about whether your idea/concept/product/service (insert whatever you like here) will make you the next billionaire in 5 seconds flat, you can do the sums on a piece of paper evidencing what could happen when it sells, the bottom line is that it is still a dream and it is still only a bunch of numbers on paper. But when the first customer buys whatever it is that you are selling and then the next one buys and the next – nobody can argue with that – because sales are facts and facts are what the investors want to see. Sales fact will give you leverage when you are looking for funding.
Every Rand that your business earns from your customers is worth it’s weight in gold, because it demonstrates the fact that people are prepared to pay for whatever it is that you are selling and this makes it less of a risk to the investor and tells them that you are serious about your business and that you are in the business of business to make money.
Facts, not dreams are what investors are looking for, so find some paying clients before you start looking for funding, it really will make your life a whole lot easier.