.You can save up money to fund your own business. Or you can find other people to finance your business for you — whether as a loan, investment or downright gift. This is typically called “other people’s money” or OPM.
OPM sources can include family and friends, traditional lenders such as commercial banks, professional investors such as venture capitalists, and co-venturers including angel investors.
However, the success in getting OPM to fund your business depends on how well you present the business to potential OPM source. According to the book “Rich Dad’s Advisors: OPM: How to Attract Other People’s Money for Your Investments–The Ultimate Leverage” the first step to attracting other people’s money for your business is to show them that your business is most likely to succeed:
“In order to attract OPM and to minimize the cost of using OPM, you typically need to be able to demonstrate that your business is likely to succeed — and succeed as defined by the source of OPM. And success means different things to different sources of OPM. Some sources of OPM have greater expectations for profits than others.”
Family and friends may invest in your business simply on the basis of their relationship with you … Other types of investors (venture capitalists or Angels) are looking for certain minimum returns on their investment … A traditional lender such as a commercial bank is often satisfied if you can show your ability to repay the loan.”
It is important that you take time to put yourself in your OPM source’s shoes and think what he/she needs to hear and see to say “Yes” to your proposal. Remember, some are more risk averse than others, and some are more willing to take on risks than others.