Why sales are critical in raising revenue for your firm?

5 Mins read

Fundraising is one of the main goals of all managers and owners of small and medium-sized businesses. Most startups that decide to succeed in raising funds are more successful in the marketplace than their competitors. However, in recent years, the investment world has evolved considerably.

Is it essential to raise funds to develop your business?

Most of the major players in the business world seem to agree that fundraising is very beneficial for small and medium-sized companies. Is this approach really effective? Is this the best method for developing a business? Focusing on the data is the best method to address these issues.

Seeing this, small and medium-sized companies will naturally be convinced that in order to develop their business, whatever it may be, fundraising is imperative. This approach is widely recognized and accepted in the startup arena.

However, investing algorithms have developed fast during the last few decades. It must be said that the support structures themselves have not evolved as well over the years. As yesterday’s investors focus on tax regimes and become a bit more tied to the industry, new players continue to emerge in the investment world that is more digitally oriented.

Thus, if small and medium-sized companies have tended to raise funds for a technological project over the last ten years, today’s investors are more interested in companies capable of increasing their turnover. In fact, there are currently many very interesting technological ideas. However, fundraising is more focused on small companies playing in the digital world regarding volumes.

Therefore, it must be said that the theory of startup development is very different from reality. Regardless of how much advise is offered on fundraising, there are always failures.

The different types of entrepreneurship and financing

The reality surrounding the evolution of small businesses has long been hidden behind an idealized image. Similarly, fundraising is a bit trickier than most are led to believe.

In the case of small and medium-sized businesses, we tend to idealize successful startups in their fields. We presume that the route they have chosen will lead to success.However, different social and economic factors worldwide mean that there cannot be a one-size-fits-all strategy. Therefore, it is essential to analyze a company’s particular problems to best solve them, rather than blindly following the route of startups that have succeeded very quickly in their field.

There are three different types of entrepreneurs. The first category includes those who accept the slow growth of their company. This is usually the case for family businesses, entrepreneurs who prefer self-financing and are therefore in no hurry to raise funds. Entrepreneurs who rely on bank loans and aim to generate their turnover are also part of this group. Each of these entrepreneurs agrees that their business will grow very slowly.

The second category includes entrepreneurs who engage in the never-ending race to raise funds despite the capital intensity of their business. They, therefore, agree to rely entirely on their investors for their professional strategy to develop their activity.

The third category is made up of entrepreneurs who, in the first place, opted for the traction march. When they saw the ineffectiveness of their chosen path, they decided to move on to a new growth phase that may require fundraising to be effective.

Let’s focus more on the latter category. To do or not to do fundraising is a question that no longer arises. Rather, the questions arise: for what reasons should we fundraise? When is the best time to fundraise?

The problem of fundraising is particularly crucial from the perspective of most new entrepreneurs, because successful firms think that the cash they have obtained will be utilized for the creation of their initial product, which is not a particularly effective strategy.

To best attract the attention of investors and accelerate fundraising, you must first ensure that your business is valuable. Otherwise, there can’t be a good return on your investment. But what makes a business valuable – isn’t it your customer base? So, it must be said that fundraising is not possible without sales.

To gather funding, create a pre-product and a pre-solution

Any business is considered more valuable when it has many customers. Take social networks. For example, the greater the number of members, the more valuable they are.Therefore, without sales, fundraising is not viable.

To show investors that your business is worth funding, you must start by finding the best ways to get more customers. To do this, consider developing a pre-product in the marketplace to promote your business. Adopt a pre-product solution to be in better contact with your customers.

In addition to attracting investors’ attention to your business, launching a pre-product will allow you to verify and demonstrate that you have profitable projects, ambition in the market, and how to attract customers (and, therefore, money). You will be able to better explain that these benefits will multiply if your company acquires investors, translating into benefits for both you and the investors.

Although you lack resources as a startup, you should strive to develop a pre-product and find the means to sell it since fundraising is not possible without sales. You must keep in mind that, like everyone else, investors are looking for a return on their investment. So, you must prove to them that your business and your projects are worthwhile.

To achieve this, you must consider all possible means of financing. In most cases, startups use their funds and personal efforts to design a pre-product. In case of insufficient funds, they may seek help from family, relatives, and friends. In the worst-case scenario, they are forced to resort to financial assistance, such as bank loans. However, obtaining this type of financing is no easy task.

Consider all the avenues that could result in a startup budget. Take, for example, the Bpi USA Tech grant. This fund aims to finance the initial expenses of a deep tech startup. You can also apply for honor loans, which can be very advantageous as they are unsecured and interest-free. This is, for example, the case with Wilco and can also rely on business angels to find funding through their networks.

When you have spent the funds you received on a previous product launch or a previous solution, you should be successful in fundraising. To do this, you should pay attention to a few points. First, you should spend the time it will take to find these funds, although this time seems to exceed what is needed to grow your business.

Employees’ choice to contribute to the company’s capital must also be made with the utmost care. To do this, you must ensure that they are people who can handle the second round of funding when you have attracted an investor. You must also be able to support the growth of your business in the best way to best optimize your values.

When you have received the investment, you need to grow your business, you must get used to the idea that your company will enter a field focused on hyper-growth. You must be prepared for the fact that growing your business also increases the pressure that all employees, including the manager and owner, must endure. However, if you are successful in selling and generating finances, the stress will be well worth it.

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