6 Steps to Create a Fundraising Process in Your Business!
It is common for it to be necessary to follow different steps, including the presentation of business plans to demonstrate the fundraising objectives. Therefore, it is important to know how to organize yourself to create an efficient process in the search for resources in the company.
In this article, you will understand what fundraising is and the 6 steps to create an effective strategy to obtain the necessary investment for your business. Check out!
What is a fundraising process and why is it important?
To begin with, it is interesting to understand what the fundraising process means and its importance. In practice, it refers to a set of strategies aimed at raising capital to finance a company project.
This can be done by various means, such as own credit, financing or bank loans and external investments. In the latter case, it is common for the company to look for investors to present its business plan in order to obtain the investment.
Afterwards, the funds raised can be used both to help the company accomplish various goals. For example, going through a crisis , launching a new product or service, continuing an expansion project, among others.
In this way, fundraising is important, as it injects money into the company’s cash. Without it, there are risks that a business will not be able to recover after a crisis, for example. In situations where capital is aimed at expansion, funding allows for accelerating the growth of the business.
6 Steps to Create a Fundraising Process
Now that you understand what fundraising is, it’s time to learn about the 6 steps to create an efficient process in your company. Follow!
1. Find out which are the sources for fundraising
First, it is important to know what are the sources for fundraising. Thus, you will be able to understand the best way to seek capital to inject into your business.
You have already seen that there are solutions such as bank financing, own credit (when the entrepreneur invests from his own pocket) and external investments. However, there are other types of investments that can be sought, for example:
- investments from family and friends;
- collective investment (crowdfunding);
- venture capital investment;
- investing with angel investors;
- Peer-to-peer investment;
- IPO investment;
- partner investment.
2. Choose the funding sources best suited to your business needs
You met the fundraising sources. Now, you should study them to understand which ones align with your business needs. A venture capital investment, for example, is often accompanied by smart money.
This strategy provides that, in addition to money, the investor will make his expertise available to leverage the business. Therefore, if your company needs not only financial support — but also managerial help —, this may be the best source for fundraising.
Like this example, there are other situations that demand other types of funding sources. It is worth studying them to make better decisions in your company.
3. Study the companies you talked to
If you chose to seek fundraising with other companies, it is essential that you study about them. This demonstrates that you are well informed and won’t be surprised by a question you don’t know the answer to.
The more confidence you have in your presentation, the more authority you convey to investors. This can be the differential to get the contribution.
4. Put together a good business plan
When seeking bank financing or investment, you need to present a well-structured business plan. In this document, it is necessary to contain the proposal, goals, indicators and the scalability of the business.
It is also common that it is necessary to develop a pitch, which is a speech of 3 to 5 minutes with the aim of generating interest in the other party for your company.
In this short presentation, you should answer the following questions:
- what is your company;
- what are the benefits of your business (product or service) for the consumer;
- what is the target audience;
- what makes your company stand out from competitors;
- what are the advantages for the investor;
- what will be the purpose of the invested capital.
5. Present business numbers
In presentations, right after the pitch, you will be faced with a series of questions about your business. After all, the investor wants to understand whether investing in your company is advantageous for him. In the case of financial institutions, they need to assess whether the granting of credit is safe.
In this context, most questions will be directed to your company’s numbers and indicators. See the main questions that can be asked:
- Is the cash flow well structured?
- How much was the revenue in recent years?
- What is the net profit margin?
- What is the operating cost?
- What is the company’s valuation?
- What is the billing forecast?
by knowing all this financial data , you show investors that you are committed to your business — offering even more confidence to those interested.
6. Have a budget ready
In addition to knowing all your company data, it is essential to have a budget ready to show investors. A business plan must have detailed figures and information about where the money will go.
For example, if your company needs the investment to build a bigger headquarters, you should know what the total cost for this construction will be. If the money will be allocated to repay debts, you should understand what the amount of all debt is and the terms for payment.
Now you know what fundraising is and its importance. In addition, you learned about the 6 steps to set up an effective process to seek the necessary capital for your company. Thus, you can organize yourself to put the tips into practice and put together a plan for your business.
