(ThyBlackMan.com) Your business needs money. You don’t have money. They have money. How do you get them to give it to you?
Before we move on to how to get money from specific types of investors and lenders THIS IS A MUST READ TOPIC SO DON’T SKIP IT.
Getting funded is really about sales. You may have not heard it put that way before but if you think about it for a minute you will realize that it is true. Think about how you buy stuff. When you go shopping you are making a decision that you are getting equal or more value from what you buy than how much it cost. You simply aren’t going to buy something that you don’t value or that doesn’t have enough value for you to part with your hard earned cash for.
Funders and lenders are no different. They are BUYING something. They are exchanging their dollars and giving them to you because they BELIEVE that they will be getting something of equal or more value in the future. In a funders case it is part ownership in a business that will grow and produce revenue for them. In a lenders case it is the interest payments and fees on the loan.
I have seen so many people come to me for a business loan in the past and get frustrated because they got denied. In their mind the business is gold. To the owner it will make a lot of money and they will be able to pay back the loan. In the banks eyes the business was risky and the owner was unproven and had bad credit. As a result the bank didn’t see GOOD VALUE in giving a loan, because they didn’t think they would get their money back plus interest in the future.
So what can you do to SELL your business to an investor or lender to get money from them? Here are three key ways that we will focus on in more detail for each type of funder in the future.
1. Know what the lender or investor is looking for. A bank is looking for different things than an investor. Also each bank and investor looks for slightly different things. DO YOUR HOMEWORK BEFORE YOUR ASK. Learn what types of businesses the banks or investors traditionally fund. Ask yourself the question “Do I fit in their category.” Focus first on those funders where you do fit.
2. Because ALL LENDERS AND INVESTORS WANT VALUE, which in this case is more money in the future from what they give you today, PROVE YOU CAN DELIVER. That is why your plan has to be A+, you have to have everything lined up and ready to make the case that you are a good investment risk and you will make them money. Remember, if you can’t convince them that they will get more money back tomorrow than what they put in today they will not give you a dime. Why would they?
3. Be willing to walk away! Yes, I know I said you need money but remember, value is a two way street. In sales, you will only buy if you get equal or greater value than the money you are giving. On the other side though someone won’t sell if they believe that the money they get back isn’t enough. In this case you are the seller. If the price of the loan is too high or the investor wants to much in ownership or control of your business you may have to walk away.
So remember, you want to show that you give value to the investor or lender. If you can’t do that, you will never get the money you need to start or grow your business.
Over the next few weeks we will move into specific types of investors and lenders and how you can get money from each one.
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Until next time, It is your life, your business, your community, OWN IT!
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Staff Writer; Dell Gines
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