Working out how you’re going to fund a business venture can be a challenge. Fortunately Richard Branson has some advice on how to find the best approach to funding for your business.
“Innovation and entrepreneurship thrive on the energy of people who are diping their toes into the water for the first time,” the Virgin Founder says in a recent blog post. “Budding entrepreneurs with fresh outlooks have the freedom to think quite differently, which is tremendously exciting to potential collaborators.”
But of course, translating an idea into an actual product can be daunting and you might feel that you don’t have the right connections or an ‘in’ with major investors. But, as Branson notes, there are people who have these connections – and they could make great mentors who will help you on your way.
But, if funding is the only reason that you’re looking to make these connections, Branson points out that there are other ways that you could fund your business idea.
“While securing huge sums of money from major business figures might seem like the ideal way to propel a business forward, the reality is that very few ventures win this kind of funding. A better alternative might be an online crowdfunding platform,” he says, recommending websites such as Indiegogo.
Alternatively you could take up a small business loan, Branson advises. In the UK Virgin StartUp provides loans of up to £25,000 to companies trying to get their ideas off the ground.
“It’s well worth your time to look into similar initiatives in your area, and decide whether a loan is the right step for you,” Branson says.
Here’s Richard Branson’s advice on working out which approach to funding is the best for your business:
Evaluate and research
Always be honest with yourself about your abilities, the work you’ll have to put in to get your company up and running, and the amount of money you’re hoping to raise. Research all the options that are available, and evaluate how they would affect your end goal.
Ask yourself: Is your crowdfunding target realistic? How much of a stake in your business are you willing to give to potential investors? And if you want to find a mentor who can help give you direction and guidance, make sure you find a suitable one. Find out what they do, whether they’ve mentored others before and which sectors they are interested in.
Get on people’s radar
Attend industry events such as seminars and conferences. Talk to as many people as possible, and do not immediately launch into a pitch of your product. Be sure to listen and learn from what people have to say.
Networking doesn’t stop at face-to-face contact, either – interact on social media, join LinkedIn groups and keep the relationships going online.
When you do approach potential mentors or investors, or if you launch a crowdfunding campaign, you’ll have a degree of visibility.
In fact, the more proactive you are in building your profile, the more likely it is that potential investors will feel confident enough to put their faith in you, and their money in your company.
Remember that the more relationships you build, the better the chances that your network will put you in touch with the people who can help your business.
Keep an open mind
Remember to be flexible. While winning investment might look like the best option now, don’t discount any other opportunities that come your way.
For example, crowdfunding might not have the prestige of an investment from a big-time entrepreneur, but it will connect you directly with future customers, and you will have more control over the process.
Keeping an open mind is especially important when it comes to mentoring. Don’t see mentorship as a quick fix for problems, and do not brush off advice.
Consider your connection with a mentor as a long-lasting business relationship that can teach you lessons and reduce the potential for failure. But also remember that, as with anything else, you’ll get out of mentoring what you put in.
Making sure that your potential business is a success is not contingent upon gaining a large investment. Many successful companies – including Virgin – started with modest funds.
Right now, investors might seem like they are the gatekeepers between you and your dream, but the one person who can make your business succeed is not an investor, or even a mentor. It is you.