3 Questions You Need Answered Before Seeking Capital

When talking about finding capital for a business, every pitch needs to be simplified to three very basic points. All additional documents, presentations and campaigning should backup these central questions:

1. How Much/What For? The more specific the better. How much is the capital requirement to move the business idea forward, and for what exactly will the capital be used and ultimately utilized? Stories may be helpful, but it is crucial that this answer needs to be completely thought out and ready to be defended in any discussions with investors or lenders. There are so many ways to fund a business without resorting to borrowing or selling shares. Have all of these avenues been pursued down to the very end of the line? How much are the founders in for, is very important as to not look foolish.
2. Repayment? Again, what exactly is the plan? After all is said and done, how will the capital be repaid? What are the fallback positions in the plan, in case the idea needs to be tweaked? Bring out the best-case/worst-case scenarios, including what to do if the competition is more threatening than expected. What collateral is involved? Where is the value of the proposition? Escape routes, exit projections?
3. Who Will Make It Happen? Certainly, this is one of the most critical questions to be answered. Who has the previous experience to make the idea succeed? Someone needs to show they have both a solid background with the subject matter as well as a successful experience at running a company. Is there a team in place already, how well do they work together, how well do they know each other? How will new hires be added? How will this affect the investor/lenders position?

With a fully qualified explanation to these three questions, the road to understanding the business concept will be much easier. It will create the foundation that any capital manager or banker is seeking to further engage in ongoing negotiations.