Do you know that some of the most successful entrepreneurs in the world- Bill Gates, Richard Branson, and John Johnson- raised start-up capital from friends and family?
For decades, raising start-up capital has been a key business challenge to most entrepreneurs yet they have a solution. Aren’t they surrounded by loving friends and family whom they can leverage to help them out?
Personally, I couldn’t believe that I could raise capital from friends and family until I came across entrepreneur poll results that ranked raising start-up capital from friends and family second.
Believe you me the poll results disturbed me, for some minutes, because I had failed to implement some of my best business ideas due to lack of start-up capital. What the hell! I didn’t do what most of us cherish, giving up. Instead, I embarked on a journey to learn how I could raise start-up capital from friends and family.
It took me days to learn and master the art. I could give you these notes on my desk I jot down. However, I don’t think it is a good idea. Why? I want to save you precious time and energy. I have compiled the ultimate steps of “how to raise capital from friends and family”. Read on and find out!
Step One: Be in Your Right Mind
Why should you be in your right mind?
Friends are people you will spend your entire life with. Maintaining a good relationship with them is essential.
The fact that they are your friends or family doesn’t eliminate the possibility of disappointments and rejection. Remember that you’re in the process of raising start-up capital. Not all will agree with your business idea.
If you aren’t prepared to encounter rejections and disappointments, chances are you will end up destroying your good relationship. Don’t fight or exchange unkind words if they turn you down, have the courage to move on to the next friend or family. I would recommend you use these two magic words- THANK YOU- to your advantage after every “talk”.
Step Two: Shape Your Reputation
Why should you shape your reputation?
Some of us are known, not for good deeds or behaviors, but for cheeky behaviors. You know yourself better!
I don’t think any friend or family could give you lots of his or her hard-earned cash if your behavior (s) is “wanting”.
Shaping your reputation will increase your chances of getting start-up capital. Let people learn to trust and emulate you. Let them consider you an asset and not a liability.
Step Three: Prepare a Good Business Plan
Why should you prepare a good business plan?
Most entrepreneurs overlook preparing a business plan before starting a small business. As I said earlier, you are in the process of raising start-up capital. Just like angel investors and banks demand a solid business plan, your friends too need one.
I was a culprit in this. One day, I pitched an idea to my dad. He complemented me for “thinking”. Sadly, he didn’t fund it because I lacked a solid business plan.
A business plan will bring out your business idea. Moreover, it will enable you understand your business well and form a basis for marketing your idea.
Step Four: Prepare a Good Story to Present
A good story will increase your chances of getting capital from your friends. Your story should state how profitable your business will be, how you developed the idea, and how you plan to mitigate the risks in order to achieve success.
A business plan (in step two) will enable you have all these facts in your finger tips.
Step Five: Identify your Targets (Friends and Family)
Why should you identify your targets?
From experience, not all of my friends are supportive. Hence, pitching a business idea to such “idiots” will only leave me frustrated.
I recommend that you present your story and business idea to friends you deem supportive and encouraging. This way, you minimize chances disappointments and rejection.
Step Six: Market Yourself Idea Well
Be a good marketer, at least for once.
I was a poor marketer but I learnt ways of how to be a good marketer. I recommend you now yourself better.In this case, you don’t have to have a degree in Marketing. If you know your business well, you’re a good marketer because you’ve have the essential facts to sell your idea. Make your business plan is your marketing partner.
Step Seven: Request for Start-Up Money
This is the last and most important step. You toiled all through to secure funding for your idea.
Free image courtesy of FreeDigitalPhotos.net
Share with Your Buddies
It is my noble duty to bring such details to your attention. Kindly help me reach out to as many people as possible by sharing the word with your friends and family. Simply click the sharing buttons below. In addition, subscribe, and become a follower to get lifetime how-to tips and practical business ideas.