Through our work we’ve learned one key factor when raising money:
Funders only give money for those who don’t need it — whether it’s a startup or an existing business.
It seems that when you need money, no one wants to give it to you.
We learned this by reviewing hundreds of thousands of applications, and hearing from thousands of entrepreneurs applying for and receiving, or not receiving, funding. Through our partners and associates as well as our clients, we’ve learned so much over the past thirty years.
One key factor is to ask for money when you don’t need it. The minute you fall down, everybody wants their money back! They’re not thinking about what happens if you get up again! They only think, “You went down, so I’ve got to recover my investment.”
So think about how you can get money when you don’t need it, and plan ahead.
That means insuring that you have cash flow for 3 or 6 months if you are depending on a season. Think 6 months if you are dealing with slow payments or slow terms with your clients, or because your growth plans require some investments.
Of course, this depends on what mindset you have! If you are in startup mode, you definitely want to get as little as possible because you have to pay it back, whether things work out or not. For those in growth mode, it can be different. The thought could be on how much you can afford on a monthly basis with the cash flow you currently have.
BEFORE YOU GO
We see our blogs as opportunities for dialogue. Please share your thoughts as comments.
- What resources do you have today that you could tap into to leverage additional funds when you need them?
- What other strategies have you used to get money from funders when you didn’t have any?
- What other resources or ideas do you have on the funding?
Faris Alami is Founder and CEO of International Strategic Management, Inc. (ISM). He works internationally, presenting Exploring Entrepreneurship Workshops and other entrepreneurial ecosystem — related ventures.
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