It is always good, and smooth sailing too, when you are starting your own business and you have all of the required capital on ground. However, as the business goes on, you would realize that you are getting some ideas for expansion and your personal pocket, or loan packet for that matter, is not even enough to get you to where you see yourself in. For this reason, it is always important in business that you learn how to source for investors and learn the best practices to get investors attracted to what you are doing. To be candid, only with investors can you truly grow in leaps and bounds, and that is what we would like to see.
1. Develop a Business Plan
If you want to get anyone interested in your business in the first place, the first thing that you would need to do is to draw up a good business plan for that business. Let your business plan detail all the little things about the business, starting from the market, potential and the kinds of goods and services you offer to the strength of your clientele and management team. It is a common thing with investors to ask for your business plan before they make a decision on whether or not to invest in the venture.
No one wants to lose money, so the business plan is the best way to convince them that you know that they are doing and that their money would grow.
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2. Create a Profit Index
The best way to get an investor to choose your business over the other ones that they have in mind is to show them how much profit your business can make. Generate a profit index for your company and make it realistic enough. Account for all variables that might be encountered during the process of operation and let them see how this can affect your profit potential too. If you would need to undergo some research to come up with the idea of number crunching, do all you have to for the greater good.
3. Build the relationship first
One of the mistakes that people make when they are seeking investors is that they only tend to focus on the money aspect of the deal. This makes the relationship kind of strained as the only thing they would be interested in here is their money too, and nothing more. Instead, try to build a strong base of friendship and trust between yourself and your investor so that they would be able to see you for the genuine and sincere businessman that you are, not just someone after the kind of cheque they can write.
4. Take the Confidence Pill
It is not always easy to get people to throw their hard-earned money into your business, especially when it is just a start up with interests and profits on paper. This is where you need to be confident in your approach and keep maintaining a positive outlook towards the business. You have to show the investor that you are a good manager and with the right atmosphere, you could even do better than what you have presented on paper.
When investors see someone that so much believes in what they have presented, it gives an edge to them wanting to shell out their money than when it’s with someone who’s not so enthusiastic about their idea.
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5. Show them the Marketing Scheme
We have shown the investor the business plan, they have also seen the profit margin that you wish to achieve with a modest level of investment. What is left now is how you hope to get your goods and services out to the final consumers, as that would show if you can really interpret what you have set down in the business plan, and explained in the profit index. If you have, at one time or the other, tried to test the market with your products and have figures to show for it, share with the investor.
Let them know that you have not created a utopian world of business in your head, and you are aware of the kind of threat that other competitors in the market pose too. This would show them that you have been doing your research well, and are very much aware of what you are up against.