Becoming an entrepreneur is exciting. It's filled with possibilities, adventure, and even danger. The idea of building a product, service, or brand from scratch and then, launching it to a passionate consumer base is what fuels the journey. In order to complete that journey, you need funds.

Fundraising for your startup idea is difficult, but with the right knowledge, you can move mountains.

In this article, I'm going to let you in on a few entrepreneurial secrets. These are things you need to know before fundraising and making your dreams a reality.

Expectations are Everything

When you're looking for an investor to help start your business, you need to understand what an investor expects from you. It's one thing if it's a family member, but most investors will demand that you know important details before even considering giving you their money.

Professional investors, such as angel investors or venture capitalists, know the lay of the land. They understand the business world and how it operates. That's probably why they have the funds in the first place to invest in someone's bright new concept (hopefully yours!).

Put yourself in the shoes of someone who has money they want to invest in. Think about what they want to see in an investment. Remember, they don't just want their money back, they want a profit!

The expectation of investors is everything, so put it at the heart of your business plans, presentation skills, and overall approach.

Know Your Gap

Have you ever heard the phrase “don't put the cart before the horse?”. That's an important lesson in life and in business. When looking for investment, don't throw yourself into pitches without being ready for them.

A key piece of data you will need is your gap. By this I mean, what's your niche? Where is the gap in the market for your product, service, or brand? How profitable will that gap be? How much of it can you hope to occupy? What's the potential growth of the customer base?

So many entrepreneurs come up with what they think is a revolutionary idea only to fall flat on their faces during pitch interviews with investors. I guarantee that a substantial number of these failures are due to putting the cart before the horse – not being ready with the right information.

As I mention in my book The Art of Startup Fundraising, you need to know your gap. Know your market. Do some research about your product and similar products which have already launched. If no such data exists yet, try to get some information through published marketing statistics or by hiring a market researcher to identify the demographic that will be interested in your product.

Having this information will exponentially increase your chances of landing an investor. Not having the data will show that you haven't done the groundwork yet and have not tested the potential of your concept.

Know Your Product Inside and Out

Another common mistake is to pitch a product or service idea based on a shallow understanding of  what you are going to sell. You need to know your product inside and out before pitching. You will be asked in-depth questions by an investor, and if they spot a flaw in the product that you have no answer for, you could be dead in the water before you've even started.

Do some stress testing of your idea before you bring it in front of potential investors. Stress testing could be performed by getting some focus groups and presenting your idea to them to see what they think.

You can hire market researchers to do this for you, but if you don't have the funds for this you can do it yourself.

Make sure that you ask the opinion of as many people as possible, especially those in your target demographic. The people who will buy your product or use your service are often the ones with the “feet on the ground” knowledge to see potential user problems.

Once you have gathered this information, you can analyze it to see what issues were discovered. Then, you can either alter your design to solve these issues or find a valid reason why these issues are not actually problems in the first place.

If you know your product, its capabilities, and its potential flaws, then you will be better placed to give potential investors the answers they need during pitches. They want as much certainty and foresight as you can possibly provide.

Know Your Numbers

Would you entrust a large amount of money to someone who doesn't understand its value? I'm guessing probably not. Likewise, investors will not hand over investment capital to an entrepreneur who has no idea about how much the business will cost to run or the profits it will produce.

Professional investors will especially look for astute business skills when hearing a pitch. You don't have to have a degree in business, but you do need to know your numbers inside out.

Your numbers should consist of Key Performance Indicators (KPIs). These are quantifiable measurements that show a business's current and future performance. Your KPIs should be easily presentable to potential investors so that they can better understand your organization, its market, along with detailed information about potential customers and products.

With your KPIs, you should convert them into concise performance indicators, with more in-depth stats and insight on hand should investors wish to dig deeper. Put across how much your product will cost to manufacture and what the gross and net profit will be on each unit. Scale this up to your forecast market share over a 3 to 5 year period.

Remember, most pitches only last a few minutes in the beginning. Make those minutes count. Be informative, assured, professional, and always have easy to understand data to back up any unique selling points for your business.

By knowing your numbers, you will be able to include realistic goals for investment return, profits, and growth. In the end, that's what most investors care about.

Know Persuasion Tactics

Lastly, a good business idea can be hurt by poor presentation skills. When informally speaking with a potential investor, perhaps over email or telephone, you should understand concise pitching. In the publishing industry, authors are expected to be able to convey what their story is about in one or two sentences.

This is also true of business.

Your initial conversation should convey what your business is developing or sells, and why it will be profitable. Have a ready-made two or three-sentence pitch so you can concisely get your ideas across during the initial conversation.

If you are doing a formal pitch, whether at a pitching event where several entrepreneurs will pitch their ideas to a room of investors or if you are doing a full pitch one on one, you still need to be concise.

Most pitches only last a few minutes. You might feel passionate about your business and want to talk about it for hours, but most investors have limited time.

Understand the pitching format and how to do this in a concise, persuasive, and accurate way. If you can do this, you will have much more success when fundraising.

Knowledge is Everything

Learning is key to being a successful entrepreneur. Whether you are just starting out and trying to raise funds for your start-up or you are negotiating a merger and acquisition, learning from those with experience is the most effective approach you can take.

That's why I started The DealMakers Podcast, where some of the world's most impressive entrepreneurs share their advice on making the best deal possible.