WOW..I mean Wow, you are thrilled, happy and like a super-computer your brain is executing different calculations. That`s how you feel when you just come up with a business idea. All of a sudden the smiles fade away, it fades into thin air, the cloud changes and immediately you come to the realization that you need money. A business idea is a pie in the sky without funds to turn that idea into a real profit making business. Getting investors and finance for your business is the starting point but the challenges in Africa makes it even tougher than in other parts of the world.
Getting investors and finance for your business is the starting point but the challenges in Africa makes it even tougher than in other parts of the world.
You are responsible for almost everything around you, starting from your family, siblings, health, security, basic amenities and infrastructure. It’s not possible for you to give up on your dream, you still need the initial infusion of funds into your idea. What do you do, how do you go about it, and who can you turn to? This is where it becomes tricky. When starting out, on the average, you are not favoured to have a traditional lender give you money or be interested in your idea. So you have to be dogged and be ready to sell your most valuable assets, borrow against your home, empty your account, dip into your pension, and ask friends and families. There are numerous high-level risks involved, including the risk of bankruptcy with your personal finance and soured relationship with your spouse, friends, and family.
This is by far the hardest part of starting a business, it puts you at risk of everything at that moment, many times you are agitated and all you want to do is just to get your product or services to market.
This is what separate the weeds from the shafts, this is why entrepreneurs are different from a normal salary earner – your ability to dig deep and risk it all.
It is necessary that you quickly ramp up your operations to go to the point where outsiders would start to notice how much you have done to get the business to that stage and the level of investment to the current state where it is noticeable. Some business can also be bootstrapped, but not all businesses would be. Some businesses are lucky enough to immediately provide solutions to the most desirable problem in their environment, such kind of businesses grow with ease. With so much at stake it is necessary that you have a plan.
If you don’t plan you would fail.
Seeking advice from current industry players and experienced personnel with strong market research would take you far ahead. What is next? Once you get over the initial hump, it is possible to seek out funding sources available to more advanced start-ups and early stage companies. Before seeking out to speak with investors, it is necessary you put your house in order and understand important tips to reach out to the public and having an impact. Listed below are some useful tips on how to get your business ready to source for investments.
Register a Company
You need to register a company before proceeding to source for funds. Having a company of your own would help cement your seriousness about the business. Remember to look for a good name and ensure you understand the legal framework surrounding the operations of your business. Speak with a tax consultant and understand what rules applies to the payment of tax in your country of operations. Some countries allow you to register a company online while in other countries you need a lawyer to help you through the process. Also, understand the kind of company you are setting up and be able to differentiate between sole proprietorship, limited liability, joint venture, partnership etc.
A business plan is a key document with which investors/lenders use to make a decision about if your business is worth investing in. A business plan also gives you a solid framework to build your business. The purpose of your business plan is to sell your business to the potential investors or lenders. This is a living document that can change based on several factors such as new ideas, new streams of incomes, new opportunities, new markets or change in market trends etc. Make sure you highlight such changes as they occur in your business plan. Your plan should show clear information about your business strategy and include the following information; products or services being offered, history, financials, revenue projections, profit forecast, organisational structure and market segments.
You need to understand how to tell a compelling story to easily attract attention, be charismatic and watch your body language. Make sure your pitch deck is very professional, concise, clear and straight to the action plan. Leave it very simple and speak about the problem you want to solve, the solution you are providing and the market opportunity to any prospective investor.
You also need a very strong team and advisors, you cannot do this alone so it is important you look out for people that have skills you don’t possess so you can leverage on them. The more professional and complete you pitch is the better impression you make.
If you want my money I need to know what you are up to, there are many platforms such as Gust.com, Angel.co, f6s.com and VC4Africa.com where you can own a profile and create a public perception about your company. Investors want to follow your progress, make sure your profile on these platforms is up to date. It happens every day, you change your business model, business plan, financial projections e.t.c always update this details on your profile as you are doing so.
If you hire someone new, closed a deal, want to recruit a co-founder, you won a competition, received a grant, moved to a new office or got featured in a popular blog, magazine, news outlet, or your product was used in a video it is important you inform the world. The more activity you show, the greater your visibility, the greater the likelihood the right people will notice your work. The trick is to make sure they are curious enough to try and find out more about the company you are building.
Target a Billion Followers
Social media is now how people including your investors know how much you are being followed. Yes, social media. Twitter, Instagram, Facebook, LinkedIn etc are the most common social media platforms out there you can use to promote your business. Using social media, you can find out how many people actually likes your brand and want to be associated with it. You can use it to promote your company and encourage people to like it. If they are not liking it, do a promoted listing with some few bucks of funds and you would get organic and paid followers. When anyone likes your venture, always ensure you thank them as it takes energy to like something.
Always post content so you can keep your fan base up to date on what you are doing. They are your ‘social proof’ and can help to get your venture noticed in its respective field. Many times fans become valuable contacts. They can act as references for your work, potentially join your advisory team, or might even consider investing themselves. Most times, investors come from the most unimaginable locations.
I am personally moved to build a global business, I do not see any reason why any African start-up would not have a global vision at the point of launching. Be excellent in everything you do, from your write ups to the way you attend to issues, how you speak in public, dressing, accent, negotiation everything should brand you and your company.
You are the face of your company and the way you are seen would be how your company would be perceived. Some investors don’t have time to check your business plans or your financials they just want to see you make their decision. So, I would advise that you personally coach yourself continuously to meet expectation whenever you have the chance.
Feedback from Investors
All investors want to know you are open to criticism and you always value their feedback. But always remember that they also want to test how much you are committed to your dreams so don`t easily fall for change in business model.
You have to know the in and out of your business, every detail of your business should always be on your mind at any time. You would receive inquiries from different quarters, always respond promptly and clarify all grey areas. Please ensure that you keep all your documents up to date. The success of your company begins with you.
Engage a Mentor
Not everyone needs a mentor but most people do in the long run. Some people started this struggle before you, some win while some fell by the roadside. Where do you want to belong? As you proceed on your journey, you need a mentor to help you through the hard times and difficult decisions.
Do not wary, speak to any of them and they would help you through. Be close to your mentor and always open up. No secret. Ok, when I say no secret I mean open up totally to your mentor.
Conduct Due Diligence
Remember, not every investor is good for your company. Speak with the local tech hub, check with your friends, and reach out to advisors to make sure the terms they are offering make sense. Ask the investor for references and talk to entrepreneurs they have supported in the past. How were they able to add value to these companies? Not all that glitters is gold! Sharpen your negotiation skills and you would succeed.
On a final note, please remember as a start-up investors are ultimately investing in you more that your business. Your enthusiasm when discussing your business anybody should be infectious. At a short notice, you must be able to comprehensively describe your business to anyone or a potential investor in few short sentences. Knowing your business inside out is key to getting the funds you need.