How to Secure Investment for your Business Startup
Many Business startups believe that getting external funding is the most crucial next step to the success of their business. Whilst there are very good reasons why external investment may not be good for your Business start up, it is not a bad idea either. However, the difficulty is how to get this investment that seem so crucial that it’s absence can drive some Business startup.
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Get a good business plan
The first step in getting investors for your Business startup is to create a good business plan. Very important. The business plan should clearly explain what your business does, who your target market is, projected sales for at least five years, industry reports that may indicate how your idea may meet an unfulfilled need and the risks involved in your business.
The business plan needs to appear professional – typed and put together in a folder or binder when you present it to a potential investor. You should also know your business plan thoroughly and be able to answer questions on it.
Start with family and friends
The best and easier way to present your business plan is to your family and friends. However, it is important to treat your engagement with them as professional as possible, because this is Business startup. Answer any questions they may have and keep the conversation focused on the business plan.
Often, family and friends are reluctant to mix money and personal relationships, but if you discuss the matter with them with a more business attitude, they may be willing to keep an open mind. Be sure to offer friends and family the same benefits you would offer external investors.
Work with an Expert
If you are new at starting business or have never been successful at one, then you may need to add someone to your startup team that has experience in order to attract investors. Investors like to put their money in businesses that promise a high chance of success and high returns.
Therefore if you can afford to hire a consultant who has had success with startups, do so. Investors are not happy until they begin to see money coming back to them, so anything you can do to better position yourself to be successful is important.
You can also include an expert in your field as part of management, not only to give you guidance and expertise but also to provide assurance to prospective investors that the people at the helm of your business are capable.
Investors would want to know why your business is different from that of your competitors and why it is not just any startup bound to fail in the next five years, or less. Trade secrets, patents, new invention or innovative ideas have more success finding investors.
If your business is not any new invention or innovation, then you would explain to investors why the product or service you are offering is better, different or meeting an unmet demand in your market.
Demonstrating that your business plan is unique from the competition, you will have a better chance of convincing them that your company is worth their investment.
Don’t shy away from the risks
Business Startup owners try to make investors believe that the business they are engaged in is free of risks. And even when they admit there are risks involved, they downplay it and present it as a miniature of its actual size and impact. Investors are smart and that’s how they made more money. Don’t attempt to fool them.
[junkie-alert style=”green”] Be honest in all your submissions, accepting and disclosing all risks and proposing strong measures to prevent or minimize their effects. If you don’t leave with their money, you’d leave with free and valuable business advice that can turn your small business into millions of dollars. [/junkie-alert]
Most successful companies began with brilliant ideas and the majority of those companies succeeded because they were able to present a business plan to investors that convinced them that the project or idea would meet a need that was not currently being met, and by keeping a professional attitude and developing a business plan that completely and competently describes your business, according to Murray Newlands.