So many people are launching their own businesses, and some of them are fairly easy to launch such as some sole proprietorships requiring little to no capital while other sole props and partnerships aren’t as easy. Many require a form of venture capital to get started.
But what is venture capital and why is it important to have a long term business plan in order to secure it?
Venture capital is finances or private equity that investors provide to those launching a business that is poised for long term growth and success. Venture Capital can come from anywhere or anyone who has the money and/or skill set to secure the founding of your business with the expectation of its success, not over the short term, but the long term.
It’s important that upon setting out to gain venture capital from a private lender or investor that one has the evidence of long term growth potential which can be delivered with either proven statistics or a well-structured business plan. Without a well thought out plan that answers all the basic questions from marketing to implementation and follow through which sells the longevity and success of the business to the investors, one may not gain the venture capital necessary to launch the business. Why? The answer is because investors won’t feel secure in the business venture.
Therefore, upon attempting to secure venture capital, at the minimum, do the following:
- Have a business plan, one that is easily followed and easy to understand, proving the business idea’s stability, goals and how those goals will be reached and surpassed.
- Be prepared to offer investors a stake in the business in some sort of fashion, only if necessary, while securing your majority stake.
- Prove how it is highly likely that investors will gain a high return on their investment.
- If you have already worked the business for a couple of years already with proven track record, allow investors to experience its success and further potential.
If a business requires venture capital, remember that the first thing to sell is the long-term success of the business.