A plausible business idea is crucial to convincing potential financiers, investors or banks. A well-thought-out idea shows that you understand the market and your target group, which increases others’ trust in your project. A sophisticated business plan is often necessary to obtain financing. This includes the strategy, an exact market analysis, financial forecasts and the step-by-step implementation of the project.
An innovative solution or service that may not yet be available on the market or that stands out from the competition in key points naturally increases the chances of success. As a rule, you can expect to have to communicate your idea and its potential convincingly in discussions or presentations in order to gain the financial support you need. So prepare yourself appropriately!
Suitable investors for the self-employed
There are various groups of people and institutions that want to lend you money or invest in your idea. They undoubtedly differ in their expectations of security and returns.
1. Friends and family: Based on your individual trustworthiness and your relationship, people in your immediate environment usually expect little or no collateral. However, it is important to make clear agreements about repayments and interest rates to avoid misunderstandings.
2. Credit institutions: Most banks usually require comprehensive collateral, such as real estate, assets or a personal guarantee. They expect repayment with interest and are primarily interested in your creditworthiness to assess the risk of loan default.
3. Investors: These include business angels, venture capitalists or institutional investors. These people or groups invest in promising start-ups in exchange for shares in the company. They are looking for a high return on their investment and usually want a seat on the board or regular updates on business progress.
4. Crowdfunding: On platforms such as
Indiegogo, Kickstarter, GoFundMe, Seedmatch, Companisto or Patreon you can raise money from a variety of people who are interested in your projects. In return, the backers want products, discounts or special experiences, but not repayment in the traditional sense.
5. Government funding: In many countries there are special programs that support founders. The money received there is usually available as an interest-free loan, but you have to meet the requirements for the application and prove that your project is at least somewhat economically viable.
No chance without a well-developed concept
First, you should start with a concise summary and present the most important points of the planned or ongoing self-employment on one or two pages. It is important to outline the basic idea and the efforts you are making to achieve your goals. Know the industry, specify your target group and explain their needs.
You should present a comprehensive market analysis. Products or services ideally have a unique selling point (USP). It is important to include market research results, trends and competitive analyses to prove that there is sufficient demand for what you offer. Estimated costs, income and cash flow forecasts belong in a realistic financial plan, forecast for the next three years.
Self-employed does not necessarily mean alone
While many self-employed people start out solo, working with cooperation partners or forming a team can be crucial to success. Tasks can be distributed more effectively, which increases the efficiency of business processes. In addition, cooperation partners expand the network and enable access to new customers and markets.
Collaboration promotes creativity that one might not develop alone. In addition, financial risks can be distributed among several people, which reduces the burden on the individual. A team can also be crucial for responding flexibly to regional to global market changes and major challenges.
Self-employment: Why it offers opportunities | What you need for success | Who can provide financial support – all articles at a glance.
