Capital remains the lifeblood of every startup, entrepreneurs require capital to access raw materials for production, pay for services, pay salaries among others. During the startup phase of the business the entrepreneur occupies himself with developing good strategies to attract the capital needed to start the business. This is done by approaching banks, family and friends, relying on past investment and assets and quite recently venture capital and angel investments which are new in Ghana. Looking for capital in this part of the globe is daunting and frustrating. Bootstrapping is another strategy employed by entrepreneurs during the start-up phase, but it may not be a reliable source of funding to grow the business beyond that phase.
“Bootstrapping essentially means that you raise money through your existing job, savings, investments or alternate business enough to get you started.”
To attract the needed funding for your startup to thrive, entrepreneurs must take note of the following;
1. Get the basics right
You don’t just jump on to the entrepreneurship journey just because you listened to a TED Talk on how you can become a billionaire by starting your own company. You’ve got to know all the intricacies of your business. You must have a fair idea of the in-and-outs of your industry. You will gain more insights after you’ve taken off but you still need to have good understanding of the business. There are many ways to beat this;
• Be an avid reader of the happenings in that particular industry- Bill Gates the world’s richest man reads 50 books a year, and he says, “… reading is still the main way that I both learn new things and test my understanding.” By reading you get to be in the know of the major trends in the industry so you will be better informed as to where the buck will be and where the market anticipates the buck will be next. You can create blue ocean strategies to make competition irrelevant and compete in uncontested markets in the industry.
• Attend industry seminars and speak to industry watchers/analysts.
• Learn- the more you know, the better for your startup. You don’t have the financial muscle now to hire consultants and analysts to do the thinking for you. Your industry’s history and happening should be at your fingertip. By learning, you show prospective partners (investors) that you are better informed to make good and financially sound calls with their investments.
2. Get a plan
After getting the basics right you need a plan. A plan is a guide to building your business from scratch. It should be very clear and concise.
Product/service, marketing and sales, product design, revenue model, competition, growth rate etc are the areas which will be covered by the plan. The well documented plan is a good step in telling investors you mean business and are ready to commit to making the business a success. The plan helps you to do your homework very well. Most importantly in the plan you must show exactly how much you need to initially run the business.
3. Get a winnable pitch
If you have the opportunity to speak to the Wizard of Omaha- Warren Buffet, one of the most successful investors of all times or Alhassan Andani of Stanbic Bank Ghana, under 10 minutes, what winnable pitch can you come up with to get them to sign the cheque for your idea?
Pitching is a skill every entrepreneur seeking to grow his business must learn. It gives a brief on what you are about with your business and why they must support you with their funds. In pitch you must cover, the who, what, when, where, why and how of your startup business. Cover very area of the business, be on point- avoid the unnecessary, because you don’t have the whole time, honesty pays in pitching, grab the attention of the listener and answer every question posed.
When pitching by a presentation, avoid staying too focused on information on your slides. Kristopher Jones is the founder and CEO of LSEO.com and APPEK Mobile Apps and he says, “If you’re using a slideshow, keep it to under 10 slides and only use it for material that backs up what you’re saying. Don’t use it as the focal point; make that focal point you.”
4. Consult, consult, consult
I have seen further because I stood on the shoulders of others- Unknown
One vital skill for success is the ability to learn from others. As an entrepreneur, you will need that skill to raise capital too.
Talk to others who are already in business and have successfully raised capital for their business. Their experiences might be quite different from yours but it will give insight on what to expect and how not to reinvent the wheel. They should not necessarily be in your industry. You just need to get some hands-on tips and pieces of information to help you standout in raising capital.
Win them over by being passionate about what you are doing. Investors will always partner with smart and passionate entrepreneurs.
You can consult from your free networks of alumni, church groupings, workplace colleagues, family and friends, community associates and many more.
Your capital alone will not be sufficient to build a successful business. Your business will likely need to raise capital. All successful businesses in the world at one point raised money from external sources, you must know the basics, have a plan, perfect the pitch and learn from others. Your business might be getting the next millionaire cedis from Ghana’s angel investment or venture capital community.
Author: Paa Swanzy-Essuman|| p.swanzy@ghanatalksbusiness.com
