All businesses need to raise capital, all the time.
All businesses, from global conglomerates to a startup in a garage, need to raise capital. As a business goes through the stages of growth it needs to raise capital at every stage.
How much effort do businesses put into developing a capital-raising strategy?
We can safely say most businesses raise capital in a knee-jerk reaction to several factors that they may be faced with, both positive and negative, internal or external to the business itself.
Capital Raising Strategy
There are five steps for successful capital raising that every business should follow:
- Develop Strategic Plan.
- Target Your Audience.
- Engage Your Network.
- Negotiate and Compromise.
- Have Alternative Options.
There are three questions that we need to answer to find a solution to your capital-raising problems:
1. Is your business or idea viable?
2.Are there funders willing to fund you?
3.Is your business or idea fundable?
The first and second questions are easy to answer.
If your business is viable, you have your foot in the door.
Capital chases opportunities, and the providers of capital are mainly interested in the return on investment.
If you can demonstrate this return you are halfway there.
The last question is the most difficult to answer and hence the purpose of our management consultancy business.
We help you, to do what you need to do, to get the capital you need.
Raising capital is not a one-time event, it is a strategic process that is built into your business processes.
It should also be anchored in “aggressive patience”
My favorite definition of this concept is “persistent action taken daily towards your goals, with the understanding that they will take time to materialize”.
Every provider of capital has a list of requirements that must be met before they agree to finance your business.
The larger the amount required, the more stringent the requirements.
Anyone that has approached a bank for a business loan can attest to this.
In the next post, we will break down the capital-raising process as well as what you need to do to prepare your business to raise capital.