Many aspiring entrepreneurs and founders can tell you about the transformative business ideas have. They can spend hours talking to you about that noble and fantastic idea about how something can be done better, faster, or with great ease. But maybe not all of them will ever act on their ideas. And even for those that do, they will have to find a means to fund it.
To fund a business idea, whether personally or from investors, you need conviction that the supposed bug idea is worth investing in. If you have watched pitches on programmes like the Dragon’s Den, then you have heard the investors comment that even though a business idea looks good on paper, it was not worth investing in. Or maybe something that sounds like this.
Bankable, creditworthy, and worth investing funds into, they all mean the same in this context. If an investor tells you that your idea is good but not bankable, it could simply mean that the idea is not worthy of his money. If a financial institution tells you your business idea is not creditworthy, it means the same thing. Many transformative business ideas may never see the light of day unless the owner is able to show that the idea is creditworthy.
What does it mean for your idea to be bankable? What does it mean to be creditworthy? How can you show potential investors that your business idea has a future? How can you prove to them that investing in you and your business would not amount to investing in a sinking ship? It is very unlikely that an investor will fund your business just out of sentiments. There has to be something to show the investor that there would be some returns.
Do a feasibility study and business plan.
First is to make sure you have done a feasibility study and you have a business plan. Beyond having the idea, you should be able to prove that it can bring in some money and will be sustainable. Unless you have numbers and data to back it, the business idea may be fantastic only in your thoughts and dreams. Do a feasibility study and test your theory. Show that truly there is a market need for the idea, and people are willing to pay for it and keep paying for it. This is the first step to making your business idea bankable.
Put in your own funds
Before seeking someone else to invest funds into your business, you should commit your own resources to get started. It is the first proof of your trust in the concept you are trying to sell to investors. Your savings, time, energy, and talent should be the starting point for the business. “If you cannot commit your own resources, why should I commit mine?” This is the unspoken question that goes through the mind of potential investors.
By doing this, you will have the cashflow records to show that there is indeed a market for your product or service. Importantly, you should be able to use this to get clear financial records and show a positive cash flow in the business. When you get started with your resources and you notice that you are still spending more than the revenue, make necessary adjustments till you have shown that the business can at least break even, and potentially become profitable. If you feel very scared about investing your own money, it could be a sign. Run another check on your idea.
Offer some real value
No one would invest a dime in your business, until you have shown a true value proposition. You must be able to spell out the value offer for investors and partners. If your business has no value offer, look for one. Investing in your business should not be made to appear as though they are simply funding your hobby for some financial returns. There should be some other sort of value they will be getting from it. All of these combine to make your business idea look bankable or creditworthy.
Ask for feedback
Whenever you share your business idea with anyone, whether formally, informally, with an individual or an institution, ask for feedback. It helps you see the idea from another person’s lessons, and can even expose holes in your idea that you never knew about. You could get some advice or feedback that would completely change your direction, and point you in a better direction.