Currently there are 400 million entrepreneurs worldwide, all vying to become the next Richard Branson. But how does one get to this level of success? It takes a great deal of planning, dedication, research and, of course, investment.
Statistics on the survival of start-up businesses are sobering, so getting that kick-start that a strong business idea so desperately needs is essential. But not all of us are lucky enough to secure a place on Dragon’s Den, so we must look at other avenues for investment to give our entrepreneurial idea the best possible launch.
Contrary to what you may think, securing investment does not start with searching for investors; it must first begin with a look at you and your business idea. Before pitching to an investor, you must ensure that your idea is an attractive prospect – with little risk.
Every successful entrepreneur will be supported by a mentor or advisor throughout the entire lifespan of the business. This support is not only to gain the guidance of someone who has experience in running their own business, but to also provide an objective opinion on your idea, so that you don’t waste your time on an opportunity that isn’t viable.
Finding a mentor is where the real fun begins. This will give you the chance to go out into the local business community, make those all-important connections, and raise your profile. Networking events are a great place to start your search. Contact your local chamber of commerce for recommendations on upcoming events suited to your requirements.
Prior to the launch of any product or service, market research will play an important role in establishing how your target audience responds to your business, providing invaluable data and insight into how your business offering can be improved.
There are a variety of methods for this type of research, including surveys, interviews, focus groups, observation and polls. You may choose to carry out just one or a mixture of these methods, but ultimately your findings should be actioned so that you present the best possible version of your idea. Many investors will want to see the results of any market research carried out in order to assess the potential of your idea, so this should play a key role in securing investment.
A business plan is crucial for every entrepreneur. Not only is this a significant document where you will highlight your budget, route to market and key roles to potential investors, but it will also give you the opportunity to sit down and really understand how you can turn your vision into a reality.
Whilst writing a business plan may seem like a daunting (not to mention time-consuming) task, it doesn’t have to be. There are many resources online to support you in writing your plan so that it is ready for investor scrutiny. Take a look at our very own step by step guide to writing your business plan here.
When pitching your ideas to prospective investors, many entrepreneurs forget that it’s not just their idea under the spotlight, but themselves also. As the face of your business, it is vital that you know your idea inside and out, including the numbers (what their money will be used for), research, how you can overcome the challenges met by start-ups and, most importantly, that you address each of these areas with confidence.
Of course, investors will be looking at how marketable your product or service will be, but they will also be assessing how prepared you are to run a business and navigate the tricky waters of a start-up.
With confidence in your idea, a well-structured plan of action and the right support in place, you are now ready to seek out investment. There are a number of avenues that you could explore when looking for investment in your business:
Crowdfunding involves putting your idea forward to organisations or individuals in the hopes that they will invest in your business, in exchange for potential profits. Over the past few years, many businesses have successfully established themselves through crowdfunded investment, but you must understand the risks and responsibilities associated with funding of this nature before you go down this route.
The government often has multiple grants available for start-up businesses, in an effort to improve employment rates and the economy. The process to gain a grant, however, is complex, so be prepared for lots of form-filling, lengthy phone interviews and don’t forget that the grant you receive may not cover your entire investment needs. This comprehensive guide provides more detailed information about small business grants in the UK.
A start-up loan is a government-backed, unsecured, personal loan that aims to get your business off the ground and encourage growth. Start-ups can receive anywhere between £500 to £25,000 if they have been trading for less than 24 months.
An angel investor is an individual (typically with a high net-worth) that chooses to invest in a start-up in exchange for part-ownership of the business. Here in the UK, we have the Angel Investment Network which helps to connect entrepreneurs with investors – find out more on this here.
Venture capital investment, unlike Angel Investment, often comes from large organisations or financial institutions, who will provide funds to start-up businesses. This investment will usually involve equity in the company and, therefore, decision-making power.
As we have outlined, the process of gaining investment for a business idea takes time and dedication. But if you apply yourself correctly, you’ll ensure you’re able to present a thoroughly-researched and well-rounded pitch that shows the business’ viability within current markets.
The right investment can take your business idea to that crucial next step, so prepare your approach carefully.
12 Feb 2024
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