Let's get right to the point… raising capital can be very difficult. The simple fact is this. There are far more people looking for capital than there are people writing checks.
Therefore if you plan to start your own business... or build your current business into a marketing and sales powerhouse, you'll need to do everything possible to ensure you can raise funds successfully to receive the skills and training you need to dominate your market.
Yes, the potential is incredible. Private Online Education for serious small business owners is a multi-billion dollar industry and one of the fastest growing categories of business. But that doesn't mean investors will line up to hand you the money you need to build the business you want.
The good news is Venture capitalists look more seriously at online business opportunities than anything else.
There are two frames of thought when it comes to raising capital for any venture… the fast way and the preferred way.
The Fast Way…
- Start your business and begin to generate some leads, convert some of them into customers and begin to build revenue in order to make your business look like a worthy one.
- Examine your options for sources of capital that appear to match up with your desired short and long term goals and objectives. (NOTE: consider other options besides traditional investors)
- Create a compelling and persuasive presentation that impresses investors by focusing on the results and benefits your business provides.
Successful businesses gain access to capital by persuading investors that their product or service will be in demand, in a growing category of business and profitable when compared to the competition.
The Preferred Way…
A plan of action is always the preferred way to approach your funding objectives. This means a return to the fundamentals such as setting realistic expectations, identifying your target market and taking the time to adequately prepare everything you'll need to be successful.
There are three major steps in the raising capital process… preparation, matching, and pitching. All three are vital to your success and should be completed if you're serious about raising capital.
Step one is to take immediate action and launch your business. Stop falling prey to "analysis paralysis." Start by incorporating your business… either through an attorney or a trusted do-it-yourself online site. Next, you need to secure your tax identification number. Then develop your marketing collateral such as your branding… including your business logo so you have the look and feel of an established and successful business. Finally, draft your business plan.
Once that's completed, you're ready to put your business plan into full force. Now is the time to start attracting local small business owners, generating PR, recruiting decision makers like accountants and the business development officer in the community and producing your online product. Together, these provide hard proof to your potential investors that you're operating an actual business… not just considering starting your new online venture.
Once your new business is operating and you're starting to achieve some revenue, now is the time to start considering your financial options. You will be faced with a myriad of options… including what many refer to as "bootstrap capital" which includes your own personal credit, your personal savings and the all too familiar "close friends & family." You may consider the debt option which includes securing a business loan or arranging financing. A third option involves an equity investor such as angel investors or venture capitalists.
Once you select the sources of capital that match your goals and objectives for your business, the final step is to develop a series of compelling messages. These will take the form of a short attention-grabbing statement often referred to as an elevator pitch. You will also need to develop some form of visual presentation such as a Power Point presentation and it should be accompanied by a thorough business plan.
Once developed, be sure you practice and rehearse your message until it's polished and professional. Then it's time to pitch your compelling presentation to each capital source you've identified.
The fundraising process consists of three main steps… preparation, matching and pitching. If you're serious about raising capital and building your business, be sure you thoroughly develop all three steps.
The preparation stage creates the foundation for your business and puts things into motion. The matching stage identifies your business with the best type of capital to match your goals and objectives. The pitching stage is your opportunity to present your opportunity to investors.