The Entrepreneur’s Corner: 3 Things You Need To Raise Money For Any Business

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Hey, you! Welcome to the first instalment of the Entrepreneurs’ Corner. If you’re here, you are probably interested in getting a business idea off the ground. Don’t worry, we’re here to make sure that you keep that energy. Our expertise for today comes from Kofi Ayisi Aboagye. And who he is … is an accountant who specializes in helping small businesses secure funding. Kofi does this through his work as a consultant. So, let’s get into it. These are the 3 things that you need in order to raise money for your business.

Traction

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Traction is basically the weight behind your words. It’s legitimacy. And it’s proof of your abilities. When someone considers giving you money, traction is what separates a pipe dream from something that can actually be successful, to that person. They’re not trying to invest in an idea, they’re trying to invest in something real that can bring them money. So how do you get this traction?

you don’t need to wait to get all the money that you’re looking for before you can do something

– Kofi Ayisi Aboagye

You need to give your idea a start in the real world. And to do this, Kofi recommends that you pursue business formation. That is:

  • Register your business
  • Create a business account
  • And establish a market for your idea

All these give you a leg to stand on when you’re asking people for what I assume will be … you know, sizeable sums of money. Other things that you can do are, start developing a product, build a team and find some clients. The more traction that you have, the better your chances are of getting someone to pay into your idea.

A Pitch Deck

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What problem have you identified in the market that you intend to solve?

– Kofi Ayisi Aboagye

The pitch deck. Now, this is important. The pitch deck is the presentation of your business to someone; it’s the ‘sell’ that you’re making. And in order for this to be convincing, there are some questions that you need to answer for your investors.

  • What is the problem that you’re trying to solve?
  • What is your solution? What’s the product?
  • What’s the business model? How are you making money?
  • What market are you selling to? And what does the competition in that market look like?
  • What is your market advantage? What do you have that your competitors don’t have?

Your pitch deck is going to be built around the problem that you’re trying to solve. After all, if there is no problem, then what are you doing, really?

One of the most important aspects of the pitch deck, according to Kofi, is presenting your product. You need a prototype, or at the very least, a visual representation of what your product would be. This helps to make it real for your investors. So, don’t just tell an investor that you want to sell face masks, show them the face masks that you’re trying to sell instead!

Funding Options

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Now that we’ve got the foundation that we need, who are we showing it to? Who is going to finance our business? Kofi Ayisi Aboagye gives us some of the main funding sources when you’re starting a business.

The 4Fs – Founder, Family, Friends & Fools

You can get funding for your business by accessing the personal connections that you have. Founder here refers to you yourself. And it’s only natural that you invest in your own business if you’re asking other people to invest in it too.

It makes sense to ask family and friends who have the capital for help to get your business of the ground. You don’t need any collateral for these kind of loans, and there might not even be any interest on a loan from these people in your life.

Finally, fools. Kofi emphasizes the fact that the word ‘fools’ here is not used offensively. Instead, it’s just used to refer to people who will invest in a business without thinking about the risk. These people invest as a result of an emotional/personal attachment to you. They’ll give you the money because you’re the one asking and not necessarily because of your pitch deck.

CrowdFunding

Crowdfunding is another option you can consider when you are looking for capital for your business. This method of raising funds usually takes advantage of an online platform. You’ve heard of Go Fund Me, Patreon and their like. These are all crowdfunding platforms.

To get funding from donors using those platforms, you need to have a cause that those donors can get behind. People will pay to support a cause that they believe is in line with their beliefs. For example, if your product is a pesticide that is supposed to reduce crop loss, people will pay to support that cause.

Crowdfunding can also be a great way to draw some attention to your business. The mere fact that people share your crowdfunding link around means that you enjoy some free marketing benefits. Additionally, other investors are more likely to come on board once they see that you can get people to believe in your product.

Incubators And Accelerators

Although the two differ somewhat, these are programs that allow startups access to funds and technical support for a duration of time. During that time, the startup is nurtured so that it can stand on its own.

However, according to Kofi, incubators and accelerators have very competitive entry requirements. And additionally, if certain targets are not being met, you can be dropped from the program.

Grants And Subsidies

These are government and corporate programs that give businesses funding for their business. However, usually, there are some underlying conditions that need to be met before a business can access these sources.

Angel Investors

The final source for funding that you can access for your business is Angel Investors. Kofi calls them angels because they are usually willing to make huge investments into a business. These are usually people who are successful entrepreneurs themselves, and are looking for novel business ideas to invest.

The Angel Investor may be a mentor to whomever they invest in. Usually, these investors ask for equity in the company, when they invest. They will however, not get too involved your daily business affairs.

So, those are the three things that you should be thinking about if you’re trying to secure funding for your business. A final tip from Kofi;

Rejections Will Come. But When You Are Rejected, You Don’t Need To Take It To Heart. Know That It Is Part Of The Game.

– Kofi Ayisi Aboagye

The Entrepreneur’s Corner is a weekly series that brings you business tips and insights from people with real-world business experience.

Source: Africa Skills Hub: Kofi Ayisi Aboagye, CA(GH)

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