Whether you are in India or anywhere on the globe, raising entrepreneurial finance is quite a challenge since you have to make individuals or institutions believe in your idea, project, business and vision.
Here are 5 things to keep in mind while raising entrepreneurial finance.
Tap your trade creditors
One of the costs in any entrepreneurial finance is the cost of inputs which can be in the form of services, supplies, raw materials or even finished products. These costs can represent a large portion of the initial finance.
Have you thought of negotiating good credit terms with your trade creditors? Traders are generally happy to give even start-ups credit in lieu of repeat business. So tap your trade creditors and ask for longer credit periods to cut down your entrepreneurial finance requirements.
Prepare a fool proof funding proposal
It doesn’t matter whether you are looking to raise entrepreneurial finance from your bank, financial institution, private investor or a Venture Capitalist, you will need a strong funding proposal.
Your funding proposal outlines the details of your business plan, the vital numbers and forecasts of performance and financial viability. Remember folks, your financiers are looking to invest in a solid business plan so don’t leave any stone unturned when you draft your funding proposal. If you are unable to answer any queries during your presentation to your prospective financiers, you can kiss your dream of raising entrepreneurial finance goodbye.
Be careful of the terms with an Angel Investor
In the day and age of technology, Angel Investors have gained popularity as rich sources of raising entrepreneurial finance. However, what you, as an entrepreneur need to be careful about are the terms of credit with an Angel Investor because this line of credit comes in the form of debt or equity. Debt is costly in the short term, while equity will reduce your share of revenue in the future. Depending on your forecasts and needs, make sure that you manage these terms prior to signing your life away.
Have a clean credit history
Your credit history is going to play a big role when you are looking to raise entrepreneurial finance, especially from the banking sector. So if you’ve been defaulting on your credit card or loan repayments, chances of you being able to raise entrepreneurial finance from your bank are slim. There are many ways to better your credit history and your past dealings with the bank and we suggest you start putting them into practice if you are looking to raise entrepreneurial finance in the near future.
Look for personal collaterals
Before you read on, be warned that using personal collateral is usually every entrepreneur’s last resort when it comes to raising entrepreneurial finance. If you have exhausted all possible sources for capital required to get your start-up business off the ground but still fall short by a tiny bit, personal collaterals might be your saviour. Although using personal collaterals are not your best option, it is always handy to keep the paperwork of your assets up to date, should the need arise to use them as collateral security for your entrepreneurial finance.
If you are you ready with a fabulous business idea and with the know-how to implement it, bank on your business plan and keep the above tips in mind on your journey to raise entrepreneurial finance.