Borrow from loved ones or friends without a legal agreement
Sometimes getting money from family and friends is easiest. Perhaps it’s because you can tug on the old heart strings, or maybe they just really want to believe in you. Either way, it can get really sticky, very quick and I don’t advise it. However, if you’re intent on doing so, make sure you get something in writing. Have a lawyer draw up a simple contract so you don’t end up on “The People’s Court.”
4. Overwhelming potential investors with too much information
When it comes time to do your pitch, it’s going to be hard to control your passion – and that’s okay. Your investors need to see how much you believe in your idea. However, make sure you don’t throw so much out there all at once that they have difficulty digesting it. Like a good meal, you need to break it up into chunks. Any good pitch will have materials prepared for each stage of the selling process.
For example, you need to give an executive summary before you try and get someone to read your entire business plan. And never underestimate the usefulness of a well-made PowerPoint presentation.
5. Being too careful
Scared someone is going to steal your idea? It’s a valid fear. However, when you’re trying to get someone to back you with cash, you need to throw that fear to the wind. Otherwise, you’re plan isn’t going to seem clear and your potential investors won’t have enough information to work with.
Getting start-up funding isn’t easy. But by avoiding the above mistakes, you could be on your way to turning your business idea into reality. What’s your plan for obtaining funding for your business idea? Talk about it in the comments.