Because the idea you put in when starting a new business is not a billion dollar idea, this has made many businesses fail because of funding mistakes were made out of ignorance.
You are Entrepreneur and you have thought of a multi million naira business idea. What do you have to do first? You have to write out a business plan and understand your market. After writing your business plan, your next step should be seeking funding unless you have money stacked up somewhere or you have intermitted money piled up somewhere. For some business models, you will not get anywhere without some initial investment. You will need to spend money to make money.
Sometimes, it can be very difficult to know how to go about seeking startup funding, especially if you are new in the business world. Also, if it is your first time to grow a business, you are like going to make mistakes. Don't worry, we got your back. We have 6 different funding mistakes Entrepreneurs and startups should avoid when seeking funding to take their business to the next level.
The first thing you want to do before seeking funding is to write a good business plan. This plan should include an analysis of daily spending estimates, the market for your product, success metrics, and location and so on. You can also include projection of spending in a few weeks or months. An accurate cash flow analysis is very important for investors to take you serious and take chance on your startup as entrepreneur.
We have said good business plan is very important if you want to win over your investors. However, too many details can be a bad thing to do. When putting your idea together for the first time, you might feel the need to go into painful details about your business. It is very crucial for you to know these details, at first glance; investors want a broad view of your company. It is possible that you know and understand the industry than they do, resist the temptation of including everything. Just let the details come later.
It will be good for you to sit down and explore many funding options for your business available to you. This is a crucial part of your business journey. Typical methods of getting funding are, getting money from friends and family, getting a bank loan or taking a long term savings.
The bank loan will not be possible sometimes if you do not have good collateral and your friends and family might also have extra money to lend you to aid your business. However, there are many other avenues to explore to get funding for your business. Some of the avenues are Government grants and loans. For many businesses in Nigeria, the federal government provides grants to help the growth with that sector. One example of government grant system if agriculture businesses.
There are other funding avenues such as non-profit organizations and private investors. It is good to seek several sources of capital to improve your chances of getting the money you need to start your business. Remember that your network will also expose you to the big players in the business world as well as wonderful mentors.
Organizations that have funded businesses like your type of business before should be your funding targets. This is because, they will likely fund your startup due to it is the type of businesses they have funded in the past. They will also have something to offer in the way of mentorship as you begin to grow your business.
When you are researching for investors, it is also good for you to understand the requirements the investor is using to grant funding to business owners and the type of businesses they fund. This will help your business idea and leadership ability. It is good to think outside the box when seeking startup funding. If you think out of the box, investors who have not funded your type of business might decide to fund your business because of the way you show them how your business and benefit them if they fund your business.
When seeking for money to fund your business, you might be tempted to request more money than what you want to start your business, this is not actually good. Some investors will see that you have underestimated the funding you need for successful business. Some investor will feel that you don't know what you are doing. Even if you secure the funding, the money will run out very soon because, it was not enough, this will make you begin to ask for more.
This can be difficult to know exactly how much your startup needs. Based on the business, it could be a wide range. In this manner, talking to a financial advisor is good for you.
Many investors will want a sizable part of your company in exchange for funding your business. Investors will want bigger part of your business. This is an agreement that cannot be changed. As you go through many funding opportunities, different investors will ask for stakes in your country company, giving away too much equity will be a mistake. This is one of the major funding mistakes entrepreneurs make.
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