How to Ask for the Money You Need
Once your business plan has been polished to perfection, you’re ready to use it as part of your campaign to get financing. If you haven’t done so already, you must decide where you’d ideally like to get the money you need. You should know whether you prefer to get financing from a lender or an investor. (This is discussed in Chapter 4.) Before you call people and make appointments, give some thought to a few preliminaries. Like it or not, you’re now a salesperson.
Your task is to sell your plan. Don’t let this discourage you, even if your experience with selling has been negative. There are all sorts of good ways to sell things, most of which depend on a good product and an honest, straightforward presentation. I can’t tell you exactly how to sell yourself and your plan, but I can make a number of suggestions.
Telephone for Appointments
Avoid lengthy telephone discussions when making the call; you simply want to set up a personal appointment to discuss all the details and ask for the money. If you’re not sure what to say, read the sample telephone script below. You can adapt it to suit your style and needs.
Write a Telephone Pitch
Since some of your preliminary selling will be done over the telephone, you’ll want to be prepared. Write a short statement of what you’re doing and why. Simply list your two or three major reasons for entering or expanding this particular business. Then write down how much money you need and how much you’ll pay the lenders or investors for using their money.
Meet Your Backers
Show up on time, well-prepared to answer any questions that may arise. Then let your natural enthusiasm help you explain your business idea fully. Your basic objective in the meeting is to answer all the questions you are asked. If you can’t handle a question on the spot, do not make up an answer promise to find the information. Then promptly write, phone, or visit with the information later.
How to Approach Different Backers
Chances are you have long since decided whom to approach first for a loan or investment. For example, you might decide to first approach your father, then the Bank of Newcastle, then the Small Business Administration. If you haven’t decided yet, review Chapter 4 and develop a list of priorities now. Below are some ways you might approach specific types of backers.
Leave Your Plan With Your Backer
Give your potential backer a copy of the business plan after you’ve met with her. If at all possible, don’t mail copies of your business plan, or summaries of your plan, to people before you meet. Your presentation loses a great deal without your personality and enthusiasm. It’s also a good idea to number each copy of your plan and keep track of who gets which plan. That way you can remember to follow up with everybody. Also, if you’re selling stock in a private offering you need to keep track of who gets the plans.
Friends and Relatives
The first rule of borrowing money from people close to you is that you want to be very sure they can afford to lend it to you and that you will be able to pay it back. Everyone who works with small business financing can tell horror stories about business owners who had to deal with both the failure of their enterprise and a bunch of angry relatives. Put simply, it’s no fun.