Even with the best idea in the world, a business has limited scope to reach its potential, unless it can get access to a ready source of money.

Rather than going into debt through a bank loan, more and more smaller business owners are seeking out funding from private investors, by agreeing to sell part of their equity interest in the business in return for a cash injection that will allow them to expand quickly.

Giving away ownership of a business in return for capital isn’t an easy decision but it seems there’s no shortage of businesses willing to go down this route.

Australia’s largest capital raising platform for small private companies, the Australian Small Scale Offerings Board (ASSOB), is currently receiving enquiries from one to two businesses a week needing to raise between $500,000 and $2 million in start-up cash.

Once a company has been approved to list on ASSOB it can issue shares to investors on the trading platform, which can later be sold in a similar way to trading shares on the ordinary stock market.

Around $120 million in investment capital has been through ASSOB in the past six years, with 46 companies successfully completing capital raising programs over the course of 2011. The average amount raised has been around $350,000.

Accessing private capital is not an easy road, however, and business owners not only need a good story to sell to potential investors but need to have well documented business plans and company accounts.

Here are the top tips for accessing private equity:

1. Owners need to demonstrate to potential investors that they and their team can deliver, and have the ability to implement the promises made in their investment documentation and pitches.

2. New stakeholders need to be welcomed into the business on a fair and equitable basis.

3. Prospective investors need to be engaged in a process that enlightens and enthuses them until they are comfortable enough to invest.

4. Owners need to tell their personal story. Keep that in mind as you tell the story of your business and how it will grow.

5. Owners should include a video in their investment pitch. These days it doesn’t take much equipment to record a high-quality video of you and your team telling your business story.

For more information about how ASSOB can help you, click here to talk to one of our team.