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
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.