Dealing with the big NO to fund your idea/business.
What do you do with your business ideas? If you are like me, I am sure every day you have an opportunity to express your idea to someone. Married to an entrepreneur and also working as an intrapreneur in a big corporate I have learn’t that NO to funding your idea or small business is not about you – but usually around your presentation and belief in the opportunity. I want to share some pointers here which can enable you to find ways of scaling up especially in tough environments.
We all have probably had our business proposal or idea rejected at one point or another especially when looking for funding. Studies show that the human brain responds to rejection in the same way it responds to physical pain. How you deal with that rejection matters because it determines whether you look for alternative routes to achieve your vision or not. Just recently I met a young vibrant photographer, I quickly resonated with them because I have loved photography since high school. The young man has so much passion and just needs a few ideas for him to earn so much more without an injection of funding that he has been seeking and stalling his own growth.
In inflationary environments, start-up funding or even venture capital may be hard to come by. This is demotivating, submitting a proposal that you know is very good, your projected cash flow and balance sheet is on point but still you face REJECTION! Vusi Thembekwayo once said “What clouds us to the lessons of failing is that we focus too intently on the pain and shame associated with failure and forget that all pain is instructive.” Rejection is part of success and you should embrace the feedback and learn from it. Take that no for an answer and prove yourself that you can do it.
So what is the problem with your proposal? The reality is that lenders want to see a track record, healthy revenues, and some experience of your product in the market. They need confidence that their eggs are going to be in a safe nest so if you cannot convince them with some security they are bound to decline your proposal. At times the outside conditions are not favourable and there is nothing you can do about it. For example, you may want to expand your food delivery service, but there are either rising fuel or food costs, an investor may consider the loan too risky because those soaring prices may make it more difficult for you to turn-a-profit or guarantee investor returns. When you face this kind of rejection, stay sharp! It is not you who has a problem – don’t start feeling that you are inadequate or your proposal is not great.
This is the time to sit down, reaffirm your goals, do some thorough research and keep up with the industry trends. Re-purpose rejection as fuel for your perseverance and chase that dream. If you walk away just because you’re rejected, maybe you really don’t want it that bad after all. Either you’re going to decide the outcome of your life or somebody else will. If you’re willing to let somebody else make the decision for you after two or three or four no’s (which is not really a big deal) you either don’t want it that bad or it’s not the right thing for you. What if that rejection is really just redirection?
You have a chance to start thinking of how to self-fund, or simply get more than one investor to buy into the idea. What I have discovered is that some ideas can actually start growing by taking small steps rather than big steps. I have a friend who was looking for huge funding to inject into their trading business. They totally believed that without that injection they would not achieve their goals. One day I asked her to test my idea – I asked her how much do you need? She said $100K. Wow, I was surprised. I asked her on average how many customers she needs – we broke it down, and then went to her customer base for ‘funding’. She raised just about $80K and brought in her goods and because they were all pre-orders, she had enough operating cash to continue running her trade.
For small businesses like hair salons and all, I encourage boot strapping. You can forego something you have to fund your idea and then when you are now paying yourself a salary, you buy it back. I know people who have sold cars to buy revenue generating assets, and others selling one of their properties to fund their business growth. They are people especially women who have used what we know as cash rounds to start businesses. For example a group of 20 doing rounds of $1K means when your turn comes, you actually have $20K at your disposal. What would $20K do for your business today? The alternatives are many so when the bank say NO-it’s your chance to rethink and keep moving.