Dear Holly,
I’ve been playing around with an idea for a restaurant for about a year now. I’ve actually written a skeleton of a business plan and shown it to my friends and family. Everyone seems interested in it and I’ve had some people tell me they would be willing to invest. The problem I’m really having is asking people outright for the money. I know that I won’t be able to raise all the money I need from my friends and family and that eventually I’ll have to expand my circle. But, I get really uncomfortable talking about money and even more uncomfortable asking people for money.
Do you have any advice on how to make this process more manageable? I’m tired of fumbling through these conversations. I’d like to be able to get a grip on this part so I can get what I need to open my business.
Thanks,
Fumbling for Funds
Dear Fumbling,
Believe me, you’re not the only one who’s awkward around money. This is a problem I see quite often with entrepreneurs especially when they’re in the initial stages of starting their business. See, most of us come to the table with many issues surrounding money and if we’re not careful, they’ll ruin our business. Deep down inside, we just wish people would see our genius and throw money our way, but it rarely works like that and most often you must become very good at selling yourself and asking for what it is that you need.
So, before you have anymore conversations about money with potential investors, take some time to sort this out. I would start by making a list of all of the reasons why you’re uncomfortable whether it’s a fear they’ll say no, or a fear that you can’t answer their questions, or a fear that they’ll laugh right in your face—believe me that’s a common fear. It’s likely that the thoughts you’re having surrounding your financial situation are irrational and because they’re just playing over and over again in your head, you’re making things worse. So get them out of your head and start looking at them from a rational perspective.
Now, just because some of them could be irrational, it’s likely that some of them do carry some truth. For instance, is part of the reason you’re uncomfortable about asking for money is because you’re not 100% clear on your financial need or how you’ll pay them back? I see this very often especially with start-ups. We have a rough idea of what it will cost, but we haven’t taken the time to actually sit down and map it all out. Investors are going to want to see that every penny is accounted for and that you’re clear on how you’ll earn it back, and most importantly pay them back. So if you haven’t spent a significant amount of time with your spreadsheets, I highly recommend you sit down and make at least 3 scenarios: optimistic, likely, and conservative.
Talk these scenarios through with your accountant if you have that resource available to you. You want to be as familiar with the language of investing as you can be. Once you start a business, it’s really your responsibility to make sure you’re educated on your finances. Remember, as the business owner, your main priority won’t be producing the product, it will be running the business. So no matter how great a chef you might be, if you haven’t acquired the financial acumen to run your business, it’s likely that most seasoned investors won’t take a chance on you. Believe me, anybody can become a “numbers person”, it’s just a choice to invest in learning that skill.
Finally, practice, practice, practice. I recommend, that before you meet with potential investors, you practice your pitch for anyone who will listen. Everyone fumbles the first few times so if you can familiarize yourself with the material as much as possible, you’ll likely feel more comfortable when you finally sit down with someone who matters. Keep in mind that we often miss the most important opportunities because we’re afraid to just ask. So do your part to get clear and build your confidence. Once you’ve got that going for you, it’s a simple as asking for exactly what you need.
Good luck!
Holly Howard runs Ask Holly How, a small business consulting company based out of Williamsburg, Brooklyn that works with a wide variety of businesses from restaurants to retail to art studios and pretty much everything in between. Her clients report increased income and profit, decreased expenses and a significantly better quality of life. Holly heads up the Small Business Book Club at McNally Jackson Books.
Want valuable insights into how to grow your business? Email Holly to set up a time to talk athhoward@askhollyhow.com or to ask a question for the next Ask Holly How.
