Aug 22, 2008

Raising Money To Start A Company, Part I

How To Know When You're Ready for A Cash Infusion?

Frankly, you probably aren't ready to ask for money. Why? Because usually the problem with launching a business or product ISN'T whether you have enough money, but more rather how much VALUE you're providing. And, most entrepreneurs who are drawn to raising quick money aren't serious about keeping their business or building a strong business in the first place.

I have a few questions to determine whether you're ready:

Have you articulated your message well?

Are you delivering high quality products and services on time and under budget?

Do you have a solid team built who can help you grow your business?

Do you have a stream of customers starting to line up outside your door?

If so, your word-of-mouth will grow your business, and you may never need money. However, that is when you will most likely be able to receive money. If you don't have "yes" answers to the above questions, I'd suggest you tighten up your business FIRST before going after the money.

I often receive inquiries from entrepreneurs about how to raise money for their business. Well, I can help you write a business plan. I can also help you approach entrepreneurs. But if you haven't addressed the above information properly, it won't matter. No matter how much money you have, if you don't have a good business model you won't success. On the flip-side, if you DO have a good business model and you ARE winning new clients, getting funding will be much easier.

Then, it's simply a matter of making sure your financial numbers and projections are in order, and approaching the appropriate resources for the cash infusion you seek to GROW your business.

The problem with most people who are seeking to get money quickly is they are ignoring business basics and failing to develop a solid base of business BEFORE going for the cash. Now, in the case of the dot-com era, there was an exception to the rule. Many companies wanted to get online quickly and build it first, so they could establish market dominance. However, if you notice, there is still probably room for a company to sell books online successfully, even though Amazon, Borders, and Barnes & Noble already have a strong market established. In addition, there is probably still a market for a better or faster web browser, although my guess is that the next killer application online won't be a browser at all.

True innovation often leads to breakthrough products and services. Have you put out the effort to innovate? If so, you'll attract the business you need to succeed.

Now, if your situation is that you've covered your bases, you have a basic business plan, you've built a team, you have a product, you're making sales and making money, and want to raise money, then let's talk about getting you quick money for your business.

You'll need to answer the questions:

"How much do you need?"

"Why should they give it to you?"

"How soon can you pay it back?"

Once you can answer these questions, and you have a stream of happy customers starting to line up outside your door, then email me and we'll go from there. Stay tuned for Raising Money To Start A Company Part II (coming soon).

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