Time and time again, small business owners are caught trying to convince some one else to back their business idea without demonstrating a high level of confidence in their idea as measured by their own hard dollar contribution. I know the off set is to point out the strength of your idea backed by the time, effort and expertise you’re going to supply. But, if you won’t or can’t put your own money where your mouth is you just might have trouble raising money for your “can’t lose” small business idea.
As you reach out to various sources of funding you might want to acknowledge the your level of financial contribution as you approach others. Just letting people know that beyond the brilliant business idea you’re proposing they invest in is a solid, well thought our business plan is a good starting point. When potential lenders sense you understand the need to demonstrate how your small business idea is going to make a profit and return their capital with interest they will be more willing to entertain investing in your business idea tv company.
If you can’t provide a significant hard dollar amount of money you have to work even harder at developing a workable business plan with a clear set of projections about how and when you’ll be into a positive cash flow position and you can begin your loan pay back. An investor wants to know you’re invested in your small business idea enough to supply all the required facts and figures for them to make a sound financial decision. It’s not enough to tell a potential investor how much you care about your small business idea. They need to see evidence that you took enough care in the development of your business plan to satisfy their need to know. An investor needs to know enough to make a sound financial decision. All the “sweat equity” in the world is not enough to off set a poorly researched business idea.
The flip side of the same coin is the fact that regardless of the amount of money you’ll be putting into your small business idea to make it successful, you’ll be fully invested in the daily effort of the business. That alone should give you cause to do everything possible to make sure your business idea has every possible chance of succeeding. Why in the world would start a small business without making sure everything was top notch.
So the question is not so much about how much money you’re going to invest in your small business idea. It’s more a question of whether you’re invested in your small business idea to the point that you’ve given it enough to demonstrate you’re sold out to the idea so you’re investor can buy into it.