How to Attract Business Capital - An Upstart's Guide

By Kenneth Jahzeal Aqwu

Many aspiring entrepreneurs set out with grandiose ideas about what they hope to achieve with their newly-conceived business idea. But a few months down the road, especially as realities begin to set in, that initial fiery enthusiasm often begins to die down. And more often than not, the embryonic business dies even before it begins. Indeed, besides the numerous businesses that die within the first five years of their establishment, there are countless other business ideas that die as ideas - a stillbirth.

Several factors have been identified as reasons why some business ideas do not see the light of day. Central to such failed concepts is the failure of the budding entrepreneur to attract sponsorship, i.e. to convince any investor to buy into the idea he is proposing. The idea behind a business may not be defective in itself. Quite the contrary, some of them are actually backed by brilliant if romantic ideas. But as venture capitalists, banks, and other investors often point out, more is needed in turning a business idea into something that is bankable than a fanciful concept.

As an aspiring entrepreneur, you need to find ways to transform your business idea into a product that can be sold that is unique in some respects. You'll also need to show what existing or newly-identified needs this product is going to satisfy, how similar products are doing in the market, as well as how this new idea is different from what the competition is already offering. In order words, you are to prove that the product is capable of turning a profit. Therefore between the two stages of conceptualization of a business idea and business success, several important calculations and analysis are required. We can put all these intervening activities under one broad heading: Planning.

Having come up with a business idea, you need a business plan which should include such items as management plan, customer service plan, operational efficiency plan, sales plan, succession plan, and so on. The list of plans is actually endless, and it is not necessary to incorporate every one of the plans into your business idea. If you wait until all plans are perfectly in place then you may never start. But you must have a business plan. The idea is to pick a few that are particularly pertinent and crucial to the business you are pondering. No business financier will take you seriously if your business idea is bereft of a clear-cut plan of how you intend to implement the ideas you are proposing. You also need to bear in mind that plans are not ends in themselves; they are merely tools to help you arrive at your destination, namely, a profitable and enduring enterprise. Hence, the true worth of a plan is not in the beauty of the prose or the presentation (though these are not to be overlooked), but the quality of decisions it engenders.

Next, your plans should adequately consider the financial implications of the various activities the business will entail. How much will it cost to implement each stage of your business concept, and how much is the resultant product expected to generate? Also, what proof is there that you can deliver on your promise?

Investors are often put off by business ideas or even business plans that blissfully ignore financial implications. Indeed, no investor will take a blind chance with their hard-earned dollar. Therefore if you hope to attract investors, get a business loan, or simply hope to perform efficiently and turn a profit, your plans should not be all flowery words and superfluous promises. They must be backed by financial facts based on sound statistics and logic.

Examining your new business idea along this checklist will increase your chances of winning the attention of investors, as well as enhancing your own chances of success. Prospective investors will then begin to see reasons to believe in your proposed business plan and in your ability to succeed in that line of business. Indeed any business plan that fails to adequately address these concerns will amount to mere 'busyness', a waste of your precious time and those of others who have to look through the idea.