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Preparing Yourself for the Challenges of Raising Capital

Raising capital for your startup or funds for your small business expansion plans is no doubt one of the most challenging aspects of starting or growing a business. This is why you must be adequately prepared for the task. Seriously, raising money for your business is not a piece of cake; as you almost have to practically beg and convince potential investors or lenders to trust you with their hard earned money.

There are more-than-countable stories of entrepreneurs and small business owners becoming discouraged and frustrated by the harsh challenges they are faced with while trying to raise funds for their businesses.

“Getting rich begins with the right mindset, the right words and the right plan.” – Robert Kiyosaki

These challenges include the amount of time it takes to secure the required funds, the crippling terms and conditions, the paper work involved, the rejections, and the lack of linearity and progress checkpoints over the course of the fund raising process. Now, let us go into more detail on some of the commonest challenges entrepreneurs face during the fund raising process.

“Never worry about tomorrow. Tomorrow, you might inherit a million dollars or be run over by a truck. Or inherit a million dollars and be run over by a truck.” – The Mafia Manager

2 Common Challenges Entrepreneurs During the Funding Raising Process

1. The “maybe” situation

It is very common for a prospective investor, either an individual or a venture firm to show great interest in an entrepreneur’s idea after the initial review, only to leave the entrepreneur guessing afterwards by not giving any definitive feedback (positive or negative) on the investment proposition. No entrepreneur would find this an easy experience.

Because they “have the gold” and “make the rules,” investors demand that you, being the entrepreneur, provide a very specific timeline in regards to growth metrics and return on their prospective investment. But they usually don’t reciprocate this by making quick and specific investment decisions. Why should they be hasty about investing in your business, when there are other promising business opportunities out there.

2. Lack of urgency

Another great challenge in raising funds for a new or existing business is the lack of natural urgency. This is usually because the number of entrepreneurs seeking to market their ideas by far exceeds that of ready investors. And so, investors have their tables filled with several investment proposals and usually need enough time to go through them and scrutinize the opportunities that each one presents.

“The rich invest in time, the poor invest in money.” – Warren Buffett

Also, most investors / lenders are busy individuals with many corporate and personal issues to attend to; thus leaving them with less time to go through the numerous business plan they receive daily. So get their attention, your business plan and email pitch must be exceptional and attention grabbing.

With the above in mind, let’s now look at the qualities you must have in order to cope with the various challenges involved in the fund raising process. These following qualities will help you level the playing field, mitigate the balance of power, and accelerate the fundraising process.