Female business leaders face several problems in the modern economy. According to the findings of Hiscox’s 2016 DNA of an Entrepreneur report, a lack of capital is a major barrier for small business growth in nearly every country. Small businesses drive innovation and local employment, so disadvantages to woman-owned enterprises can harm the overall economy.
The DNA of an Entrepreneur report states that 40 percent of female respondents cited funding issues to be the largest hurdle for starting or expanding a business. The study also suggested that women perform exceptionally better than men in tasks related to organization and social media. Since business performance does not appear to be an issue for most female business leaders, it is clear that the funding problems of women-owned businesses must be corrected to spur growth in communities across the globe.
The struggle of woman entrepreneurs is not news for loan market analysts. For at least the past decade, women have been issued fewer loans than their male counterparts. The interest rates of these loans are often higher than the average rate for similar amounts.
Numerous organizations have grants for female entrepreneurs, but women will inevitably need to rely on traditional capital investors. By using these pitching strategies, you may be able to obtain larger loans with fair interest rates.
Receive Feedback From Customers in Advance
If you have a prototype of your product, do not be afraid to show it off to customers before you meet with investors. You can take note of what groups enjoy your product, and you can roughly understand how your company will fare on the open market. When you showcase your product before its official launch, you should survey a wide group of consumers. If your budget permits it, you can also hire a professional statistician. Statisticians have numerous methods that can help you predict how your product will perform within certain markets. Most investors adore statistics and hard data. These figures help them understand if your idea will be profitable. If you can demonstrate how your company will be a success, you can receive adequate loans with lower interest rates. The interest rates or equity stakes increase with the risk of the investment, so your main pitching goal is to calm the investors’ worries.
Think Like an Investor
Pitching your idea to an investor is a psychological game. Fortunately, this will work in your favor if you understand that every human responds to incentives. Since you are the person who needs funds, monetary incentives are unlikely to sway the investor to your side of the argument. Instead, you need to discover what makes the investor tick. Pin down their passion and use it to your advantage. For example, if your investor is a lifelong runner who qualified for the Boston Marathon, use this in your presentation. Mention how your product will help runners, or simply reference Heartbreak Hill and other key areas of Boston. These references do not need to be directly related to your product, but subtle tie-ins to the investor’s passions may help you secure funds. To learn about investors, comb their public profiles. In the age of social media, LinkedIn, Facebook and Twitter have more information than many biographies.
Focus on Growth – Don’t Avoid Risk
Many investors see female entrepreneurs as people who are averse to risks. While you may see this as an indicator that women could be safer borrowers than men, capital investors do not necessarily want options that are safe. They want options that generate high returns. To convince investors that your idea will be worth their time and money, you should outline a clear growth strategy during your presentation. Show the investors how you plan to stay afloat during the upcoming financial quarters but also demonstrate how you will transform your product into a real moneymaker. If you plan to turn your brand into a household name, focus on your marketing and social media goals. On the other hand, if you wish to regularly fill new market needs, demonstrate how you will evolve your research and development practices over time. By highlighting both your short-term and long-term goals, you can convince the investors that you are willing to make sacrifices to make your company successful. You can show that your decisions are calculated and strategic, but you should be prepared to prove that you are a visionary.
Share Your Exit Strategy
You should never suggest that you plan to improvise at any point in the timeline of your business operations. At best, this increases the risk of your company, and you will receive a higher interest rate and a smaller amount of capital. At worst, your funding request will be denied. To build confidence in investors, you can share the complete timeline of your company. Share a story of the actions you will take as soon as you receive the funds, and explain what will happen when you reach a certain amount of revenue. Will you attempt to grow your company into a massive corporation? Will you franchise? Will you sell the company to another investor? Regardless of what you decide to do with your company, a clear exit strategy will convince investors that you are serious about the success of your ideas.
Be Direct with your Funding Request
Some women entrepreneurs fail to acquire funding because they use vague language that is not suitable for the business world. Do not state that you need “a sum of money” or “financial support” without numerical values. In general, investors are analytical people. You are more likely to receive funds if you state the amount of funding that you need. You can bargain the percentage of stock shares that the investor will receive to improve the deal. After you state the amount of funding that you need, you can explain how your company’s profitability will offset the expense for the investor. Investors lend capital to turn a profit; convince them that they are making the correct decision. Once you secure the funding you need make sure you take the next step to protect the business you’ve worked so hard to build with a business insurance policy.
Written by Hiscox Small Business
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