Can anyone jump into the cannabis, hemp or CBD industry and get funded?
Yes and No answers are annoying, but this is one question which both are true.
Starting with the approval. Anyone with an idea that is viable, a business plan that is solid and projected cash flow numbers that are realistic has a good start. Of course there’s much more, including capital of your own to share the risk and experience.
What you, the borrower bring to the table when seeking funding is equally as important to what a lender / investor will bring to your project. It’s a mix that must blend well together in order to have success.
A ‘No’ answer is given to borrowers who haven’t fully thought through their ideas and can in quick-time explain the essence of their project.
The rationale for declining to fund is usually the borrower is seeking too much money for the project they want to undertake. Also, the borrower have no money of their own invested in the project; and very often the sales revenue numbers are over inflated.
Too often, entrepreneurs expect 100% investment and use of someone else’s money to help them reach their business goals. In 2020 it is absolutely unlikely. As a borrower, you have to invest some of your own money into your project, and if you’re unable or unwilling to do so, expect a lender to say ‘no’.
To get a ‘yes’ approval, here are some basic steps.
- Write a concise Business Plan. (6 pages or less)
- Write a concise Executive Summary. (2 pages only)
- Cash Flow Projections should be completed and signed by an Accountant.
- You should have completed 3 keys to your business success and have receipts to verify the costs and amount you spent completing them.
- Have cash or access to cash (personal line of credit) to support your project.
- Hire and pay a professional to put your package together. Most entrepreneurs attempt to do it themselves (investor packages) and most fail.
- Throw out your Pitch Deck. It is unnecessary for a start-up.