To Raise Money You Must Prove Performance
Raising money is a selling process. Think about it. When you try to sell a product or service, your ultimate goal is to have someone give you money that you can use in your business to hire employees, pay bills, buy assets and so forth. And when you try to get money from investors or lenders, your ultimate goal is to have someone give you money that you can use in your business to hire employees, pay bills, buy assets and so forth.
So trying to raise money is not unlike selling a product or service. You have to appeal to a third party in a way that motivates them to turn over their cash to you. But there is a crucial difference. When you sell a product or service, the customer will focus is on whether or not your product or service will perform as expected. When you try to raise money, the investors will focus on whether or not you can perform as expected.
So we have the question of performance—your performance. Can you actually make your plan happen? Do you even have a plan? If you can make your plan happen, can you actually earn revenues and profits? Just as important, do you have the proper systems, controls and procedures in place to monitor your activities and your progress towards reaching your goals?
So remember, if you cannot convince investors you can perform, then they will seriously question the likelihood of getting their money back. If that happens, they are just as likely to pass on your deal and look for something else that provides a greater level of assurance of repayment.