Before You Go After Startup Funding, Ask Yourself These Questions
When starting a new business, at some point you’re probably going to need to raise funds for it, and if you’re like most people, you haven’t a clue regarding the types of questions you’ll need answers to, both for your business and for your potential investors.
Potential investors will want to know your answers as well, and rather than head into the process unprepared, let’s help make you more prepared by listing at least some of the important questions you’ll want to have answers to.
7 Questions that need answers for startup funding
1.How much capital do you need? – Having a clear idea about how much capital you will need obviously simplifies the task considerably. Evaluate what your costs are going to be, and keep in mind that it always costs more!
2.What are you willing to give for this money? – There will be a price to pay, and you need to know ahead of time what you’re comfortable giving up. Whether that’s an equity position, or a simple return on investment, know your numbers and stick to them.
3.When do you have to pay it back? – When are you expected to repay this investment? Are the terms you’ll be getting conducive to running your business while doing so? How much strain will this produce on the business?
4.What’s the growth plan? – This is a significant factor your investors and you should both be interested in. Along with the growth plan a time frame is needed.
5.What are you putting up? – What is your financial stake in this? Knowing what you’ve got on the line can be comforting for investors being asked to pony up a lot more.
6.How much input do investors get? – It really should be made clear at the very beginning precisely how much guidance or “help” you want from investors. Best to avoid these kinds of problems right from the get-go.
7.Who buys and uses your product or service? – Who is the ideal customer, and how do you plan to market to them? Having a firm grip on your eventual buyers calms many investment fears!
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