When it comes to raising capital, timing is really everything. Most people with a great new idea are so eager to get started on it that they burn out their list of potential investors long before they should have ever been approached in the first place. By the time that they actually have something worth investing in, they can no longer get anyone to return their phone calls or e-mails. In the impatient world of capital formation, patience, or at least, perspicacity, is a cardinal virtue.
Everyone knows somebody who might be interested in their new idea under the right circumstances. The difficulty is in accurately judging when that moment has arrived. Capital is not a replacement for labor buta rather is its invaluable ally. Most idea men have this plan whereby they interest someone in their idea, who puts up a bunch of money to hire somebody else who can actually go through the hard work of developing and manufacturing it. The proper name for these people is dreamers.
Dreams are an important part of capital formation, but the people who have the capital already did not get there by taking reckless chances on somebody with no track record, no plan of action, and only the vaguest idea of how much things will cost or how everybody is going to get their money back. The much abused phrase “business plan” is nevertheless a critical building block for anybody who is serious about raising significant amounts of capital for their fledgling venture.
Writing a serious business plan is mandatory and there is a little secret you need to know about your first one. It is really going to suck. This means that you should definitely not show it to anyone you regard as a legitimate potential investor. Instead, show it to people who have experience in life but no interest in investing. Explain that you are not looking for their money but merely their opinion on how your business plan sounds to them. You will receive invaluable feedback on the weaknesses of your presentation, which you can then go back and correct again and again until everyone seems to think it is okay.
Now that you have a bulletproof business plan which you have been forced to justify in front of multiple critical audiences, you can move forward and present it to the people who might actually have some interest in your proposal. Think how much more impressed they will be when they read a business plan that looks like a serious idea for a change, rather than a wet dream scribbled on the back of a napkin. Imagine your own confidence in your ability to sell your idea now that you feel comfortable in talking about it.
As mentioned above, timing is everything, but proper preparation for that moment adds a little something extra.
This was a contribution by Naked Business Consulting, Australia’s capital raising experts. If you are looking to expand your business with the assistance of capital funds, why not head to their site for a few pointers on how to get a boost of capital.