JOHANNESBURG - Seasoned entrepreneurs will tell you that rejection comes with the territory.
Some might even go as far as saying that if you’re not getting rejected, you’re not knocking on enough doors. Airbnb founder, Brian Chesky, famously recounts how he approached seven prominent funders and received five rejection emails, while two simply never bothered to reply.
Entrepreneurs must therefore remember that a “no” should not be the end of the conversation. It is important for an entrepreneur to understand the reasons behind the rejection in order to begin to turn it around. To do this, and hopefully turn that no into a yes, you need to do the following things:
According to a recent small and medium enterprises (SME) landscape report, the top reasons for small businesses being refused funding include insufficient operating history (50 percent ), inadequate cash flow (40 percent ), limited collateral (34 percent ) and a bad credit score (27 percent ).
Even businesses that have all of their ducks in a row will experience rejection from time to time. It’s therefore vital that you get comprehensive feedback about what has resulted in your business being rejected for finance.
Once you know what your funding application was lacking, you have the insight required to improve it and try again. For example, if your credit score was an issue, make a point to pay off any outstanding credit card bills and other short-term debt, as these tend to carry the highest rates of interest.
Aside from getting a tighter grasp of your financials, this may be a good time to relook at your business plan, perfect your pitch or consider reaching out to a different financier that is better suited to your business.
It is important to conduct thorough research in this regard, as each investor or financier will have a precise idea of the type of business or idea that would attract their interest. It is therefore imperative that entrepreneurs tap into this and “play the right field” to ensure a successful application for finance.
The best way to turn any no into a yes is by having the right attitude and taking rejection in your stride. Look at each rejection as an opportunity to gain insight from experienced business professionals on what can be done to improve your business or idea and your chances of success.
Most importantly, do not lose hope. If you have a business model that you believe in and the hard skin required to make it as an entrepreneur, you have to re-channel the negative energy created by the rejection and make sure you come back stronger in your next attempt.
After all Chesky did not let his long list of rejection letters deter him from reaching his dream. Today his home-rental service has grown to a $31 billion valuation, raising over $3 billion in outside money.
Ben Bierman is a managing director at Business Partners Limited.
- BUSINESS REPORT