It takes more than just a great idea to turn a start-up into a profitable business. One of the things on the list of requirements is sufficient cash to turn what’s a grand dream into reality.
There are several financing options these days, among them angel investors who can bring with them critical mentorship and a strong network of potential customers. That’s what Kiosk Outlet Stores, a retail franchise business in Nakuru, found in its recent appearance on KCB Lions’ Den.
The founders walked away from the TV show with a pledge of Sh3.15 million from investors Darshan Chandaria and Kris Senanu. We spoke to CEO Shadrack Mwangi on what made them stand out.
1. Have something tangible
Most investors don’t invest their money and time in ideas. They value effort and passion, and are more likely to invest in an idea that’s already been transformed into a business, no matter its profitability or operational difficulties.
The fact that we have kiosk units in Nakuru town and several others undergoing construction convinced the investors to collaborate with us. What sealed the deal was when we told the Lions’ Den panel that we’d received hundreds of applications from interested clients.
2. Have a team that shares your vision
Not only do investors invest in a business idea, but also in the team behind the idea. Investors usually join businesses as partners, and the partnership only works if the team is right.
No matter how small your team is, proper recruitment should be done to make sure only those that add value to the start-up join you in the journey to success.
The team must be courageous, passionate, visionary and most of all ready for mentorship.
3. Understand your business
Understanding our business took time, but it was all worth it. It really helped us during the pitch and in getting our valuation right. We were able to clearly state what we want for business because we had deep understanding of Kiosk Outlet’s current position and the competition it faces. As a result, we were able to answer the investors’ questions in depth.
4. Understand the timing
All business ideas may need funding at some point. However, the most important question to ask yourself is the perfect time to seek this extra injection of cash. It took us about 18 months to start looking for investors to fund our business. We wanted to make sure we had a good understanding of our business, its operations, competition and product demand.
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We’d also established the need to have investors on board for not only their funds, but also their valuable network and mentorship. Every business must establish sound partnerships and networks to guarantee its place in a competitive market.
We marched into the Den knowing whom we wanted to have on our side and why. Pitching our business on the show is one of the best decisions we’ve ever made as a company
5. Have a clear plan on how you intend to use the investment
Businesses, just like fine wine, take time to mature, and the duration varies from one idea to the next. It is, therefore, important for entrepreneurs to carry out a proper market assessment to establish if they really require the external funding in the first place. You don’t want to rush a process that needs time to develop sustainably.
If you do realise you need the cash injection, then have a clear plan on how to spend investors’ funds, and have satisfying responses to questions on the business’ accounts, projections, revenue streams and equity on offer.
6. Demonstrate accountability
When seeking funding for your business, you have to get your numbers right and have a clear vision. You may not get the funding you expect on time, but don’t lose hope. Continue doing all you can to achieve your goals, and eventually you’ll appreciate the fact that you never gave up on your dream.
7. Value business ethics
It’s easy to be carried away by events as an entrepreneur. Most founders suffer from the get-rich-quick syndrome that tends to lock out patience, accountability and business ethics. It is important to remain realistic in business and work at achieving the next milestone.
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