Raising finance for a business can be a complex and time-consuming process, it involves identifying the financial needs of your business, researching funding options, and presenting a convincing case to potential investors/lenders. There are several common mistakes that entrepreneurs and business owners make when raising finance for their businesses:
- Not having a solid business plan: It is essential to have a clear and concise business plan that outlines your goals, target market, and financial projections. Investors/Lenders want to see that you have a well-thought-out plan for growing your business.
- Not being realistic about the amount of funding needed: It is important to be realistic about the amount of funding your business needs. If you ask for too much, it may turn off potential investors. On the other hand, if you ask for too little, you may not have the resources you need to grow your business.
- Not having a good financial track record: Investors want to see that your business has a history of financial stability and success. If you have a poor financial track record, it may be difficult to secure funding at good terms.
- Not Building Relationships: Networking is an important part of raising finance. It is essential to build relationships with potential investors, lenders, industry experts, and advisors who can help you navigate the process and connect you with the right people.
- Not being prepared for due diligence: Investors/lenders will want to thoroughly review your business before committing to funding. It is important to be prepared for this process and have all of your financial documents, contracts, and other relevant information organized and ready to present.
- Not understanding the funding options available: There are many different funding options available, such as bank loans, venture capital, investment firms, financial institutions and crowdfunding, locally & internationally. It is important to understand the pros and cons of each option and choose the one that is most suitable for your business.
The only reason an investor or lender will fund your business is that they know they can get their investments back with profit/interest.
Article Contributed by:
Manoj Sureka
Managing Partner – Private Equity Advisory
Synergy Fin. Consulting
manoj@consultsynergy.ae
