5 Keys to Raising Capital for Your New Business Idea

Learning how to raise capital for your business idea is often difficult for many otherwise very capable would be entrepreneurs. Raising finance, be it from a bank, a venture capital firm or a business angel, has a lot to do with being able to sell your business idea, and less about how good that idea actually is. The best business idea can get nowhere if you cannot convince your prospective investors of its potential as an investment and your ability as a business owner of making it a success. You should keep the following key points in mind when trying to raise capital for your new business idea.

Prepare a business plan

Writing a business plan is often a lot of work and distracts you from doing what you want to do, which is running your business. But you won’t get any funding without a solid written business plan. Telling an investor or your bank contact that they should give you money because you had a great idea is just not going to cut it. A business plan will explain exactly what you plan on doing with that money, why you need it and real numbers proving your business idea potential. Among other things, you’ll need to be able to prove that you know your audience and the size of the market you plan on targeting, your marketing plans, your expected cashflow for the first few years and how will you deal with risks such as another competitor entering the market. If you are unsure about how to write a good business plan you can also hire a consultant to help you prepare it, but make sure you know exactly what’s in it, since the consultant won’t be with you when talking to the potential investors.

Practice your pitch

Looking for investment is like selling your business idea to somebody who knows a lot about what makes a good, profitable business. While a good business plan is the basis for your pitch, you will still need to deliver it the right way. It’s worth investigating your potential investors, and adapting your pitch to that information. For example, a bank is often conservative and would be more interested in you showcasing how your business idea is a safe bet and has a solid base, without extravagant expenses or high risk taking. However, an investor with an existing portfolio of cutting edge technological business may be more interested in listening to how your business is highly innovative and will use the money to create the next big thing online. Do not go into any meeting with your investors without researching all you can about them and their style, since they will have no doubt researched you to see if you, as a person and a businessman, are likely to succeed.

Plan for threats and weaknesses

Remember when at job interviews people asked you to name your weak points? Your investors are going to do exactly the same about your business idea. While it’s clear that you wouldn’t be asking for investment if you didn’t believe your business idea has a high potential for success, you should also be aware of what things could make it fail, and be able to plan for it. Do not say “Nothing can go wrong, I have everything covered” because at best you’ll get a reality check from the investors about the many things you had not considered, before politely being shown the door. Being secure of yourself is great, but realism is highly appreciated in business.

Know your USP

What makes your business idea unique, and so makes people choose you over anybody else to buy from? Your unique selling point, or USP, will be key to your marketing strategy since it’s the reason why people will buy from you. A generic business with no unique selling point is not likely to make venture investors interested, because if anybody can do it, it’s probably not going to be very profitable. Investors want a high return on investment, and that means that your business should grow and not just be good enough for you to make a living. On the other hand, a bank may be less demanding with your uniqueness, as long as you are using a proven business model on a niche that has room for new players, but a bank knows that they’ll get their payment through your loan interest so they are satisfied with you just breaking even and paying your loan.

Show that you the right person to lead your business

This is another challenging issue when trying to get finance, and a question that few investors will ask you directly so you need to show it by your actions and your sales pitch. Some people are great at having ideas, but are very bad at making those ideas into a real business and managing the day to day of said business. As a business owner, you’ll need many skills that aren’t directly related to your business core idea. Even if you are technically the best developer in the world, and the person who can best implement your idea, you may not be the right person to actually manage it and many investors will notice that unfavourably. Make sure you come across as a savvy businessperson, and not just a great inventor or a proficient salesman.

App Fog Genius Lessons From A Successful Entrepreneur

App Fog Business Startup Lessons from a Lucrative Entrepreneur

Lucas Carlson is a successful startup entrepreneur. When he first started however, he made a few bad choices that almost cost him big time.

Don’t Skip Business Setup Planning

At first he was just programming an idea for App Fog. He didn’t have a landing page, any bank account, brain storming ideas, or thinking about the ideal customers. Skipping key steps really put him back for years. He would program for weeks, and then finish the app idea. Then program for weeks and finish the idea. He couldn’t get people interested in the idea that was created.

Creating a Landing Page

Finally, he decided to create a landing page one night when he was too tired to sleep or even tell his wife about the programming idea. The app idea was PHP Fog. He tried putting it up on a site before that called Heroku.com. He registered the PHP Fog website and just simply wrote “it’s like Heroku for PHP”. Heroku’s site only allowed for Rudy on Rails applications so he couldn’t put the applications on that site.

Living the Dream

The next morning he woke up and had eight hundred people on his website! He didn’t market it anywhere else. All he did was put one link on Hacker News network. Also, he described the website in more depth. It turned out that the idea was a “hair on fire” idea without even the creation of the project! This gave him assurance that if the effort is put in, the results will be desired. After programming for two weeks. he just only had a prototype and the traffic went from 800 to 4,000 unique visitors per day!

Hair on Fire Problem Equals Confidence

He had identified a “hair on fire” problem. This gave him confidence to program the solution. This changed his life forever! He realized the difference between having a problem that people know they have versus the problems that people don’t know they have. PHP Fog wound up being AppFog. It raised $10 billion dollars and was later bought out.

No Marketing Expenses

He didn’t spend a dime on marketing! It wasn’t an accident. People already wanted the idea and were looking for it. He learned that he could find what people already wanted and then program an application based on what they wanted. He wasn’t taking a “shot in the dark” anymore.

Don’t be Intimidated

Creating a landing page or micro-website is very scary for most people. They don’t want to know if others like their great idea or not. There is a denial psychological part to this way of thinking. It can be self-defeating to the creation of an idea. They will think “Well I believe in the idea so much, that I don’t care what other people think about it”. This philosophy will kill a great idea. Put your “right foot first” and see what people need.

Fallacies About Profitable Business Ideas You Must Ignore

In the course of my study and practice in the field of online business, I have often discovered that folks head into the actualization of their assumed profitable business ideas online with several unrealistic assumptions.

Many have been told that all they need do to setup a profitable business with their ideas online is sign up for a few programs, build a website around them, add a bunch of banners and links onto their site, then sit back and watch the finance roll in without them having to lift a finger.

There is a misunderstanding that when you come online and set up your profitable business with your ideas you will be making large finance within a few days. This is absolute nonsense and even if it has worked for some folks it has not worked for me or for anyone I have come in contact with throughout my online business activities and interactions. The bitter truth is that more folks fail at their online business ideas than those folks who actually succeed.

Newcomers to the world of online venture are oftentimes unaware of the fact that they may actually have to work harder at their home based business than they did at their offline jobs. They are usually not aware of the many hours of selling time that they will need to put in in order to succeed in even the most profitable idea.

On the other hand most folks that are new to online marketing also make the deadly mistake of thinking that a single strategy will be enough for them to succeed in building a profitable business online. Of course, some avenues will produce improved results than others, but in my understanding, the best course of action is to adopt a broad based approach to your ideas for a business. This can be done by spreading your time and resources through several different methods and approaches.

If you are new to online business, it is a strong first step to take a course to find out what is required of you to be profitable with those particular online business ideas. There are so many top business ideas out there and it does not matter what type you are beginning, if it is online, it must be marketed online, and as may be needed from time to time, offline as well.

I am always amazes how often folks that commence business with some top business ideas actually believe that they can get rich by doing absolutely nothing, or at least with very little effort. It is true that the internet acts as a leverage for our efforts but thee is a limit and that limit has to be understood. Sometimes i wonder why folks would believe in this “something for nothing” theory. My conclusion is that they believe because they desire to believe. They believe because they see folks who advertise profitable business ideas everyday and everywhere on the internet and thus believe that it is possible. They not only desire to believe it, for their own reasons, but they need to believe it because the delusion makes them feel good.

From my experience i have observed that you need to give yourself at least a few months to make money from even the most profitable online business, get some hold and thus commence to generate some reasonable revenues from you ideas for a business. The proper mindset is for the beginner to think long term as opposed to crave instant gratification.

I am often appalled to see the number of folks who drop out of business even with top business ideas, after the first month or two and I ask myself, what do they expect, a truck load of finance slashed out behind the computer monitor? Most folks wouldn’t bail out of offline venture after a month yet they expect an online business to be any different.

In addition to the fallacy of instant riches without any effort, from your ideas for a business, the expectation of having a free ride is a frequent fallacious assumption of many that desire to commence business with their ideas. You must not be afraid, or unwilling, to invest a little finance to commence your own venture especially if it is a profitable business ideas which you must have competition. If you desire to make money online from any profitable business idea, you must also be willing to invest into it not only in terms of time but in cash. That is as plain and easy as it is.