Almost every single day, I get a message from someone asking me for a loan or an investment so that they can start a business. I understand that to start a business you need money, but just because someone is successful doesn’t mean they’re obligated to help you. Someone might help you out, but only if you show them the value. You don’t approach a successful person with a request for money. You approach them by giving them value first, before asking for anything in return.
Your problem probably isn’t a lack of money as much as it is a lack of ability to attract money. Believe me, there is lots of money out there. There are plenty of wealthy investors who want to invest their money with a good entrepreneur – but you must attract these investors. That being said, here are 5 strategies to fund your business:
1. Approach a Shark
If you watch Shark Tank, you know what kind of investor a shark is. Sharks are venture capitalists, professional investors, and extremely wealthy and successful entrepreneurs. Many Sharks started out just like you, and now they’re made of money. Sharks typically invest in wise, experienced entrepreneurs with proven success. They don’t tend to bet on pie-in-the-sky ideas from someone with zero business acumen or zero sales.
When you’re dealing with sharks, you’ll need to be prepared to give up a large percentage of your company because they’re risking their money on your new business. Part of the reason they’re called sharks is because they take a big bite out of your company. The big chunk of your business that you have to give to a Shark could be well worth it, though, since sharks tend to have extensive business experience and loads of resources.
2. Approach a Dolphin
Dolphins are the financial institutions. Dolphins are the banks, the credit union, or other institutions where you can borrow money. Banks, however, are very conservative and they’ll often decline your loan request.
Dolphins might seem nice and friendly, but their teeth are just as sharp as the sharks, and they can bite your head off. Dolphins make their money off the interest from the money they loan you. Unfortunately, it’s not that easy to convince a Dolphin to loan you money.
3. Approach a Fish
Fish are your family and friends. These are the people who loan you money. They will say they believe in you, and they will help you. It’s much easier to convince these fish to loan to you or invest in you than it is to convince a Dolphin or Shark.
4. Get The Money From Your Customers
Getting money from customers is the best way to get money to grow your business. Get some sales, and start making money from your customers. This is the most ideal way acquire funds to put into your business.
The other reason why the best way to get money for your business is from customers is because it proves you can sell. Trust me when I say that you don’t want money for your business if you don’t first know how to sell. You need to know how to sell in order to grow your business.
You can get money from your customers ideally by having them pay in advance for your service, or having them pay a subscription or membership fee. You could even do a Kickstarter or a GoFundMe to see if there’s interest, and to start getting paid for what you provide, while seeing if your customers like what you’re offering.
5. Prove Your Business Model
If you start getting customers to fund your business, you’re proving your business model. This allows you to take what you’ve started to the Sharks, Dolphins or the fish, and show that you have something worth investing in. You can show them that you have gotten to a certain point on your own, and now you want to grow, which is why you need a loan or investment.
Sharks especially want to see that you’ve earned revenue and made sales on your own before they invest. They need to see that proof of concept, and they want to see that your business is earning that recurring monthly income. They’re too smart to invest otherwise.
So that’s how you make money to fund your business. It’s up to you if you approach a Shark, Dolphin or fish, but remember: Prove your business model, learn how to sell, and approach an investor with a proven concept.
Is this making sense? Do you understand how to get money to start your business? Comment below if you do.