How to get funding for your brilliant business idea
You might have the best idea in the world (or at least you definitely think so), but it’s not going to get off the ground if you haven’t got any money to back it.
The best way to get investors is to ensure that you do your research and planning before you even try to pitch your idea to them.
1. Research your market.
Finding the target market for your business is very important.
Start by asking yourself:
- Who are you targeting with your product (or service)? Be very specific. Include demographics such as age, gender, education level, geographic location, hobbies, and interests.
- Are people actually interested in your product? It might theoretically sound like the answer to everyone’s problems, however if no one is prepared to buy it then it won’t succeed.
Use a variety of different sources to inspect the opportunities and complications.
You will need to gather direct data from your target audience, which you can do by:
- Using surveys to get feedback from current and potential customers
- Testing focus groups
- Conducting one-on-one interviews
- Using polls and analytics on social media
- Looking at data available on platforms like Google Analytics.
You can also get useful data from universities, government statistics, business development agencies, industry associations and online business databases.
2. Get advice from someone with experience.
You need an objective, expert opinion to give you honest feedback on your idea and whether it’s worth investing your time and money into building.
This is where having a mentor can be a true asset to your business.
Some people are very protective of their ideas and don’t want to share them with other business owners. However, you need to open yourself up to criticism and a certain amount of risk to be able to bring your business to fruition.
Most experienced entrepreneurs are happy to share their wisdom with others, it’s just a matter of approaching them in the right way.
3. Calculate how much money you will actually need.
It’s important to have a good idea of how much money you actually need to not only start, but also to grow the business, before you start approaching investors.
You’ll need to factor in things such as a marketing budget, slow periods of the year for business generally and for your specific industry, employee wages if you need to grow beyond just yourself, and much more.
4. Create a business plan.
A well-developed business plan can help you pitch your business to investors, and prove that you have thought out the process thoroughly.
Important components to include in your business plan are:
- Target market analysis
- Business description summary, possibly including a mission.
- Product or service information
- A financial plan
- Marketing & sales strategies
5. Look at all your investment options.
Some common ways to generate funding include:
Small business loans
- Loans allow you to keep the most control over your business, but the requirements and repayment terms can be challenging.
Venture Capital funding
- Venture capital firms are behind some of the most successful start-ups, but it’s difficult to grab their attention, and the terms and conditions can be a lot to overcome.
- Many start-ups have launched Kickstarters to do market research and prove there is interest in their product, as well as start pooling the money to fund the idea.
- Angel investors put money into start-ups because they believe in the entrepreneur and the business, as well looking to make money off their investments. The relationships are usually more personal and hands-on than a venture capital firm, and can even be friends or family members of the entrepreneur.
Generally, you will need to offer equity in your company to people who are interested in investing—which can mean you end up with less control over your company in the long run.
6. Think outside the box.
Corporations and government bodies know there are plenty of great business ideas out there which require funding. Many offer grants, support programs and some even run contests for entrepreneurs.
Make sure that you read all the terms and conditions before applying, as lots of these funding endeavours have specific rules and requirements.
Some Victorian-based options include:
- Victorian Government grants.
- Business Victoria business support.
- Invest Victoria grants and support programs.
7. Get your investors attention!
Start by talking about your business with everyone you know. Leverage your network, see who’s interested (or has connections to those who might be interested), and have a formal pitch prepared before you have any meetings with potential investors.
Investors want assurance that your company has a good chance of giving them a healthy return on investment, and won’t be interested in funding you unless you can prove you have the product and the plan to make your business a success.