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Access to finance is the key to an entrepreneurial culture
With the backdrop of the current economic climate few would argue that it is an important time to be building an entrepreneurial culture in our region. However, the inter-dependence of an entrepreneurial culture and our ability to raise finance is often poorly understood.
Entrepreneurship seems to be the zeitgeist of our day but what does it actually mean?
In its most simple terms entrepreneurship is the process of conceiving, realising, growing and exiting a business. The final stage is key to making the process repeatable and financially sustainable.
But what role does finance have along the way? Well, moving from concept to reality requires money. Turning reality into growth requires money. A lucky few businesses are in the right place and the right time to experience rapid growth organically, but most will require some investment to help them successfully complete all four stages.
Conversely, there are few obstacles that are faced by entrepreneurs that can’t be removed by money.
Therefore to have a truly entrepreneurial culture requires an openness to and understanding of why, when and how to raise finance. It is part of our role at the Growth Investment network to promote that understanding. If you are in business because you have a passion and you want to see your business grow then you are somewhere on the four stage path. This path will lead you inexorably to exiting your business at some stage, be it for profit or loss. If somebody offered you a huge sum of money for your business tomorrow, would you accept it?
Probably. So if you understand where you are heading and you are happy for it to happen sooner rather than later, why not start working towards it now?
Start the process early, not when you are desperate for the money. Negotiating equity stakes when you are desperate for money puts you at a distinct disadvantage.
Understand what the investors are looking for. Investors think differently about your business. Try to put yourself in their shoes. Imagine if you were giving away a large chunk of money and only getting it back if the business is successful, what questions would you want to ask?
Treat raising investment like making a big sale to a new customer:
o Research all your potential ‘customers’
o Start networking with them first without trying the hard sell
o Find out what they are looking for
o Make sure your offering is tailored to their requirements
o Try the soft sell first i.e. ‘if I could offer you XYZ, would you be interested?’
o Make the pitch when and only when you have maximised your chances of being successful
And finally, do as much research and reading around the subject as possible and the Growth Investment website, www.ginem.co.uk, is a pretty good place to start!