Whenever I speak with entrepreneurs and ask them “what are they doing on raising capital”, the answer that comes almost most of the times is “we have given presentation to couple of VCs, let’s see!”.
But what does raising capital really mean?
Personally I feel raising capital in nutshell means being ‘cash flow positive’. Now the question comes how to be cash flow positive? The answer lies in your financial knowledge – if your income is more than your expenses then obviously you are cash flow positive.
So to raise capital, generate more income streams by keeping your expenses low. There are many ways to generate income and doing more sales is the primary way.
Have you ever wondered how investors evaluate businesses like Facebook, Whatsapp etc which have expenses 5x than income?
- Sell Sell Sell Sell Sell Sell
- Retain current customers
- Get new customers
- Expand to newer markets, territories
- Buy or create income generating assets
- Devise or innovate new products
- Build an income generating system
You can never grow or expand without selling to current customers. And to sell more you have to have knowledge of what you are selling, how you are selling, and what you get after selling. Knowledge is the power, and when an opportunity presents itself, you will be prepared to act with confidence.
Even VCs or investors analyze your profit loss statements, cash flow statements, balance sheets etc before they invest in you. Now, how would you generate these statements without selling or how would you create 5 year business plans without forecasting sales?!! So if you have poor money management skills i.e. your expenses are more than your income then whatever in the world you do it will not be easy to raise capital.
Keep on raising capital!!!