Getting It Right – Seeking Funding and Financing

You have attended dozens of presentations and sent your business plan to every possible potential financier but you keep getting rejections. What could you be doing wrong? Africa Report has compiled a list of mistakes you should avoid to improve your chances of getting your business financed.

1. Unpreparedness
You have finally secured a meeting with a potential investor. What’s next? Meeting a potential financier is just one step in a journey of a thousand miles. Eager to embark? Then make sure you are prepared adequately. Investors or venture capitalists are quick at scanning opportunities. You need to make sure that the first impression you give is a striking one. Put together a well-researched executive summary. Arrive early for the meeting and be smartly and professionally dressed. Have some courtesy and confidence but don’t come off as an arrogant person. Practice your presentation but do not memorize lines. Explain to them your ideas, growth strategies, the challenges you expect to face and how you will tackle them. Win their hearts and you will get their support.

2. Sending an entire business plan
One easy way to get your financing dreams thrown into the trashcan is by submitting an entire business plan. Investors receive lots of financing requests and cannot spend hours perusing through the dozens of pages of your business plan, no matter how good or interesting it may be. Instead, submit a short executive summary to capture their attention. If they are interested in knowing more about your business idea they will request for the whole detailed business plan.

3. Giving false information
You have five minutes to impress an investor, so yes, the process may be both intimidating and stressful. Yet, even if they ask you a question that takes you off-guard, breath in, try to think and never lie. Be honest, straight forward, tell them you need to research or find out at a later stage but don’t make up some answer to impress them. Giving false information will only make them loose confidence and trust in you. To invest in your business, one has to trust it will be worthwhile.

4. Not knowing your facts
A common mistake most entrepreneurs make is to talk endlessly about their grand business idea and forgetting to point out how much revenue it is going to generate. Investors are not philanthropists; they will invest in a business if they know they will get some return on their investment.  So, know your facts and bring the forecasted figures. For instance, after telling them how your business idea will revolutionize communication, present the potential projections, return on investment, exact loan you are requesting. Also include, how do you intend to generate those revenues: is it through sales or advertising? Are you planning a marketing budget? What is your personal investment?

5. Lack of effort
After submitting your executive summary or pitching before a panel of investors what do you do?  Don’t wait for them to call you back. Take the initiative, wait few days and grab the phone. Ask to speak to the person you’ve met with and maybe ask for a follow-up meeting. If the person is not available, don’t leave a message; just call back a little bit later. Show your investor that you are committed.

6. Lack of research
Ask the right person. Imagine giving an impressive presentation of an agri-business idea to an investor who solely finances technology firms. This will inevitably lead to a negative answer and a waste of time. Before you put hours in preparation for a presentation do some background research. What kind of business do the investors finance? Do they have limited investment offers? Have they invested in a business like yours before?  What are they likely to be looking for?  Believe it or not they will be conducting background research on you and your business. Save yourself unnecessary rejections.

You may not get a loan or financing after your first appointment. But with perseverance and a good preparation, you will be on the right track to sell your idea, should it be an innovative one, and get the financing you are looking for. Just make sure you get it right.