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“We just need some money!!! No you don’t…”
It seems simple. Your business needs money and so you begin looking for it. It then seems impossible. You discover you have limited options, if any at all. You are frustrated because you are not getting the answers you want and can’t understand why no one wants to help. If you are like most entrepreneurs you have probably failed to explain the problems that have lead to your request for money. You have probably failed to explain the solutions that your business is pursuing to address the problems and how money will help to facilitate a positive result. In short, you have failed to provide a compelling reason for someone to help your business. There is a simple way to present your request and get the money you are looking for.
Money rarely fixes a problem that hasn’t been well defined
There are many of reasons an entrepreneur will give to support a request for money. From “the market is slow” to “we didn’t anticipate the results we are getting” and even “the government and vendors are making life rough for us” are all excuses that get used when having to explain why a business needs money. Money is a resource to be used like any other resource but many entrepreneurs tend to think that money serves the function of filling in holes yet to be found in their business model. The need to address financial pressure can overshadow the need to review and discover where a business actually needs help. When panic turns into a crisis, a business will do whatever it takes to access money that it thinks will solve it problems. Many times this results in kicking the can down the road on underlying problems that don’t get addressed which can lead to a business closing its doors.
There are three basic steps you can take to improve the chances of accessing the money your business needs.
First: Define the Problem
Lack of money isn’t the problem. The problem is that money (profit) isn’t enough to pay for the costs of needs of the business. Why? Too high overhead? Too low pricing? No tracking or monitory of business activity? No sales traction? The better you can define the problem, the better your chances are of finding the money you are looking for.
Second: Define the Solution
This is the tricky part because it’s not always obvious. If you knew the solution you probably wouldn’t have a problem. Coming up with a solution is part inspiration, perspiration and aggravation because it requires some hard thinking. There are often changes that need to happen and those changes can be tough. Laying off staff, cutting costs, getting rid of equipments, etc. are all decisions that will have an impact on the business but may also help alleviate some problems.
Third: Get to Work!
This is where the magic happens. There is nothing more fulfilling than knowing what a problem is, coming up with a solution and then getting to work on it and seeing the results. This is what being an entrepreneur is all about. Problem solving.
I have heard it said that there is always money for a good deal but there isn’t always a good deal that needs money. Take the time needed to create a compelling case for why your business needs money, how it will use the money to facilitate a positive result and ultimately how it will be repaid. It should be obvious that providing money to your business is a good idea and investment.