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Obtaining Financing For A New Business Venture

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You have a concept for a business, you have written a detailed business plan, and you have submitted it to literally hundreds of banks, financiers and venture capital companies and everyone has declined any further interest.

You cannot understand why absolutely no one is interested in your business venture. After all your concept is unique and the financial statements that you have put together, as part of your business plan, shows that the proposed business venture is going to make millions of dollars.

In the mind of any financier, be it a banker, angel investor, or venture capitalist, first and foremost is the qualifications of the management of the new company. The best idea in the world will not be successful if the management is not capable of implementing it.

The first thing that a potential investor considers is the background of the proposed management.

If you and if you have any, your partners have little or no business experience, you immediately have two strikes against you and if you do not present a plausible management structure for your new business venture, you will probably have a better chance of finding the funds you require by buying lottery tickets.

Identifying weaknesses within your management capabilities is not necessarily seen as a negative. In fact, it is generally seen as a positive, providing you propose solutions to the weaknesses. You cannot change your background or expertise. It is what it is.

However, you can augment or supplement the management of your proposed venture in a couple of ways.

  • You can add staff or proposed partners that will fulfill and provide the necessary management expertise that is lacking. This can be difficult, as listing someone that would be hired, with the details of their expertise and background, should funding be arranged, requires that the individual literally be on stand-by for what could be an extended period of time.

A paragraph outlining the management capabilities or proposed management of the new venture should always be included in the “Executive Summary” of the business plan.

In summary, you are asking people to give you money. People you don’t know and don’t know you. To be successful in obtaining that financing, you must convince people that their investment is reasonably safe, will be utilized in the best methods possible to achieve the goals of the proposed venture and will not be squandered.

Finding a banker, financier, angel investor, or venture capital company to invest in your new business venture can be difficult. It is even more difficult if you do not present your management capabilities in a clear and precious manner.

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