When starting a new business, at some point you’re likely going to need to raise funds for it, and if you’re like most of us, you haven’t a clue as to the sort 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 take a step to make you more ready by listing at least some of the important questions you’ll want to have answers to.
7 Basic questions you need to answer for startup funding
How much capital do you need? – Having a clear idea about how much you need obviously simplifies the task considerably. Assess what your costs are going to be, and understand that it always costs more!
What will it cost you? – What are you willing to offer for this money? Is it going to be shares of your company, and how much is that? 10%? 25%? This is something you need a firm grasp on, and at least initially not be swayed from.
When do you have to pay it back? – When will you be 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?
What’s your business growth strategy? – You and your investors should be quite interested in your plan for growth. Not only is the plan of importance, but also the time frame for growth.
What are you willing to risk? – Are you willing to put up equity (other than sweat equity) in your startup? This can sometimes make it easier for others to see their way clear to invest.
How much input do you want? – Making it crystal clear from the beginning how much outside input is welcome is a good idea. Many investors want nothing to do with this, but there are othersâ€¦
Who buys and uses your product or service? – Who is the ideal customer, and how do you intend to market to them? Having a firm grip on your eventual buyers calms many investment fears!