The step(s) that everybody seem to miss, except of course the prospective financier is this:

1. Do your numbers make sense

Even a mediocre financial person is able to see by looking at the numbers whether you understand what it takes to run a business. Most start up businesspeople do not realize that financial people are able to read numbers and get a picture of the overall mindset of the author. If you fail this part then you are doomed.


2. Do you fully understand what you are busy with.

Ok, so lets say you have a great financial mind and you've convinced the financier that you understand the numbers now comes the tricky part. Are you able to answer various questions off the top of your head; how big is the market, who are your customers, woh are your competitors, how are you going to make money in the industry, do you have industry experience and and and...if you are unable to answer any of the questions off the top of your head then you don't know your stuff. Industry experience; financiers hardly ever back people with no industry specific experience. That fact that you are a brilliant woven basket salesmen does not make you a brilliant yoyo salesman if you have never been active in the industry.

You need to understand that financiers back people who have already put their nuts on the line to learn the industry and are looking to expand their output though investment....but here is the catch, every single investor is going to ask "What's in it for me". Entrepreneurs are of the mistaken belief that people will invest money in their new en devour simply because they have nothing better to do with their money, it doesn't work that way. The investor can leave his money in the bank and get a fairly risk free return. The question that you need to ask yourself is can you give your investor his cash back with more interest than he can get by simply leaving his money in the bank. If the answer is yes then you need to be able to quantify the associated risk, and of course the bigger the risk the bigger reward the investor will want.

I am of the opinion that each and every entrepreneur needs to look at his own business in the same critical way that an investor would. If you are unable to convince yourself that you should put your balls on the line for your business then you will never convince a financier.

At the end of the day the only thing that really matters are the numbers. Know your numbers and you are halfway there.