Raising Funds should be easy; there are plenty of investors looking for a better return and lots of businesses that want to use that money. If you know how, raising the funds you need is straightforward, but it isn’t easy.
The problem is:
- The business proposition must be credible;
- While they say they take risks, people with money are fundamentally risk averse; and
- Nothing is without consequences, there is always a price to pay.
Credibility
Nobody will fund a proposition that they don’t believe in.
A highly charismatic and persuasive individual may very well be able to secure backing by creating belief in the absence of any significant supporting evidence or just by referencing well publicised ‘realities’ but most of us aren’t that charismatic! Normal business people need to identify the key elements that give their plan credibility and then test them for robustness and durability.
Once the plan is demonstrated to be robust, durable and achievable it becomes much more likely that you will be able to secure the necessary finance.
Risk Averse Funding Providers
Most people who have money have worked very hard to accumulate it. They don’t generally want to start all over again; the “risks” they take are normally within defined criteria and with as much mitigation as can be secured.
Once it is understood that, while the decision maker will say that they are prepared to take risks, they are actually risk averse, it makes sense to include detail in the proposal showing how risks are addressed and more importantly include credible evidence that the risk is mitigated by other factors in the proposal.
Nothing is without Consequence
The statement that ‘Nothing is without Consequence’ is, perhaps, a statement of the blindingly obvious however it is nonetheless worth repeating as it is often ignored by a business seeking to raise funds.
A business raising finance will have their plans thoroughly interrogated and challenged; often to the point where the owners/directors feel they aren’t trusted.
The cost of money will always be higher the more variable the potential outcomes are and there are always covenants and commitments that must be adhered to throughout the life of the deal.
Raising Funds is Easy
Different sources of money come with different expectations. Available funds are generally available for specific purposes and sectors. Once you know the types of proposal that appeal to particular lenders and investors, it is much easier to secure a positive outcome by matching your well thought through proposal to the funds that are looking for that type of home.
Take the correct steps and approach the right people in the right way and you will be able to secure the money you need.