Small business expert and founder of Leadership Quantified, Leslie L Kossoff, explains how to ‘sell’ your business to investors with confidence

If there’s one single, big mistake business owners make when they’re thinking about taking a loan, it’s this: they treat it as an event. It’s not, it’s a relationship.

The good news is, the mistake is easily solvable. It’s just a matter of adjusting your thinking and actions in the lead-up. The rest – along with your balance sheet – will take care of itself. Here’s what you should do, in five easy steps:

Step 1: Check out the field

You know people. More importantly, you know people who know people, and some of those people are money people. Those are the ones you want to talk with now – because just as business owners talk with other business owners, money people usually hang out with their own crowd.

So, start talking with your trusted network. Ask them who they bank with, how they like working with that bank – and, specifically, with that banker. You want names, not just institutions – you’re going for a relationship, after all. You want to know exactly with whom you want to do business.

Step 2: The introduction

You’ve done the schmooze and have a good idea of who you want to talk with – and who you don’t. Be prepared for the very real possibility that your current bank and banker are not on the list. After all, if you’re going this far, they’ve given you a reason to seek greener fields.

Once you’ve got your list, ask the people who have those existing relationships to give you an introduction. Remember, you’re not asking for a favour. You’re a good deal – and they’ll get points from their banker for bringing them new good business.

Step 3: Do the dance

Make the time to meet with each of the bankers on your list. Give them your ‘elevator pitch’, but not your balance sheet yet. Let them know what a good deal you are. Then let them schmooze you. Let them tell you why they’re the best bet for your business – now and going forward.

The thing to remember on the banking side is that they want you to think they’re doing you a great favour by deigning to give you a loan. That’s wrong. You’re the one doing them the favour. You’re bringing them your good business – including interest. They want that, and they want you – especially if you’re clear that you’re looking for a long-term relationship and not just a one-off event.

Step 4: Play the field

Just so you know, you’ve already won the game. You and your pitch have whetted the interest of your potential partners – especially because you came in with an introduction. They know you’re a good deal, and not another stray customer walking through the door.

Now’s the time to play them off against one another. Set up another appointment with each of your prospects. Tell them that you’re interested in doing business with them – but that the other guys are offering something else, something better, something that makes them look like a more interesting partner, at least possibly – but only if they can’t or won’t meet the same terms.

They’re going to want to see your balance sheet, but don’t share it just yet. They want to shift the power to their side. Don’t let them. Your financials are none of their business, not until you make it so by putting them on your shortlist. They’re not there yet. They still have work to do to earn your business.

Step 5: Make the commitment

You’re ready. You’ve made your shortlist of ‘final’ choices. Now is the time you apply – to multiple banks, don’t just go with one. You’re still playing the field here – because unless and until they commit to the terms you want, you don’t want them.

Be ready to negotiate. Hold them to their word from your earlier discussions. Make them do the work they’re there to do – which, in a word, is to help you succeed.

Once you’ve selected the bank and loan you want, make that banker happy. Just as they have helped you and your business succeed, you’ve just done the same for them, their bank and their career. Sign the deal and celebrate. After all, it’s a win for everyone. You’ve created the positive relationship you want and need for your long-term success.

Share your experiences

How did you secure funding for your business? What advice would you give to a budding entrepreneur looking to secure an investment?