The 7 Best Fundraising Tips for Small Businesses
As a small business, raising funds can be a challenging task. However, with the right strategies and approach, securing funding for your business is possible. Having worked with 100’s of companies who have successfully fundraised from the best investors in the world, here are my best fundraising tips for small businesses:
1. Speed is the key ingredient to fundraising
The best small businesses can secure funding in less than 4 weeks. You should aspire to this by running a tight, well-planned fundraising process. The longer it takes you to fundraise, the harder it becomes. Why? It is a negative signal to investors the longer you are in-market fundraising. This is because investors will assume the worst and believe that other investors passed on the opportunity to fund your business.
2. Pick the right time to fundraise
The right time to fundraise for your business is when you have the most leverage, not when you are running out of money. For example, it might be a good time for a coffee shop to raise money when they can show a full year of strong financial performance.
3. Build relationships beforehand
Most of the work is done beforehand. Don’t wait, build relationships with people who can help your business today. This includes friends and family, bank representatives, angel investors, and more. Doing so will speed up the fundraising process and increase your chances that they will give you money.
4. Create a compelling fundraising narrative
Create a pitch that tells a compelling story about your business, its potential, and the impact it can make in the market. It should be opinionated and clear.
For example, a coffee shop might create a pitch that emphasizes the quality of its coffee, the experience of its management team, and its commitment to sourcing ethical and sustainable coffee beans. They could also highlight their location in a busy shopping district, the growing demand for high-quality coffee, and strong revenue numbers.
5. Leverage herd dynamics to your advantage
The most significant factor that influences an investor's perception of you is the opinion of other investors. When one investor invests in you, it creates a ripple effect, and other investors will want to invest in your business. If you understand this, then you can use it to your advantage in conversations with investors.
6. Maybe means no
Many investors will tell you “maybe” in some form or another. Take this as a no. They are telling you maybe to get more information, but rarely does this turn into them giving you money. Most good investors get to conviction quickly and will send you money right away. Focus on getting in front of those investors.
7. Don’t put all your eggs in one basket
Small business owners should not put all their eggs in one basket when it comes to fundraising because relying on a single source of funding can be risky. If that source of funding falls through, the business may find itself without the necessary resources to continue operations.
Remember, fundraising is a process that requires effort, patience, and persistence. By implementing these tactics, you can increase your chances of successfully raising funds for your small business.
