How to Attract Investors in a Business Plan? 4 Steps to Find Investors1:26 PM
If you are looking for an investor for your business idea , Learn how to find investors that will fu...
If you are looking for an investor for your business idea, Learn how to find investors that will fund your startups let you begin the entrepreneurship journey. I have earned a lot of experiences while I was looking for investors for my business startup a few years back.
Before you start a business, make sure your business idea is being financing by companies or investors. Don't die at startup because of not having enough money to venture.
Getting money for your business is one of the biggest concerns of entrepreneurs, especially novices. The fact is that getting financing is a challenging task. So if you are looking for sources of capital outside your family and friends, take note of these strategies to position your project as a good investment:
Know what investors wantInvestors look at three things: the people behind the idea, the idea itself, and the answer to the question "When will I get my ROI?"
Many concepts fail to get funding because they have a great team, but not a good idea; Or have a great idea but the team is not fit to execute it, or simply because they don't know when and how to generate the ROI.
If you have what the investors are looking for, that means you also have a real Business Plan that includes cash flows, specific projections of the return on investment and a true understanding of the market in which you will insert yourself.
Guide your numbers to a single investorThe idea of getting financing is to get it all in one round, which means you have to be very realistic with your projections.
For example, you must think about what would be your most fatalistic financial scenario. It is key that you identify those numbers. You should also keep in mind factors such as the cost of getting customers, developing marketing strategies and working capital. Usually, things take twice as long and cost twice as much as initially planned.
If you don't like those numbers, see how they would look if you cut your sales projections by 50 percent and double your expenses, then use this figure as a base and add another 30 percent more in expenses. It is better to raise more money than you need to try to get a second round of funding.
If you want serious investors, be a serious investmentOne of the main reasons why a person chooses to finance themselves with family and friends is because he is unwilling to do serious market research to make sure the business is at least viable.
However, the reality of getting financing with loved ones is darker than they are painted; Generally, the benefits are not so great, and the major risks: lost money, hurt feelings, broken families and broken friends forever.
It is, therefore, best to approach a group of private investors who will force you to do the heavy lifting to get your project going. In addition, this way you will know if there is a market for your idea.
What does a winning financial package look like?Take the example of a franchise that was recently funded. Let's say the founders have complete business and marketing plans, a team, a concept that has proven to be successful locally, samples of decorating materials, ROI and cost projections and a legal picture of the risks. Is this a guarantee of success? Don't.
You can have all this in order and still not have a winning financial package. If you approach 20 investors and the 20 say no, then maybe it's time for you to step back and review your concept.
Keep in mind that you could review 50 ideas before coming up with a profitable model that will generate profits for everyone.
Also read: How to get investors to fall in love with your business idea
This is one of the main reasons why so many companies fail: business ideas have limited appeal or are entering a mature and saturated market.
Your best strategy is to use the knowledge, information, and numbers you found in your research to discover a unique area or niche in which to insert yourself. Not only will you get to a good idea faster, but you'll have all the information you need to show potential investors that investing in your company is money well spent.
Also read: 7 Tips for Small Business Startup Success
Where you can find investors for small business startups? Find private investors at your local area by visiting local banks and business owners. Also advertising is another good idea to attract investors. LinkedIn professional network is another best option to find investors online. It's free to get started.