In today’s world of online dominance, many businesses manage to start up with almost no funds. They start a small business, they advertise and market online, and many of the services that they offer are over the internet. They have very few start-up and running costs, and they are seemingly able to make money from nothing. This is, of course, fantastic. It means that more people than ever are able to start a business, work for themselves and give their employees the chance to work flexibly and be a part of a growing company. In fact, 90% of 25-34-year old’s have considered starting their own business, and 1 in 10 workers are actively seeking to start a business within the next year.
But, unfortunately, not all businesses can start with nothing. Many need cash to get started and more still need investment and funding to carry on going. Without continued financing for the first few years, many small businesses fail, some leaving their owners with financial issues going forward.
Attracting investment isn’t always as easy as you might hope. With more businesses starting, the competition for investment is fierce, and as more small businesses fail to make a profit and return their investment, banks and investors become more reluctant to offer up cold hard cash. So, how do you go about attracting investors to your business, above all others?
Prepare a Business Plan
Now it’s easier to start a business many people jump straight it, without taking the time to prepare a business plan. This is a mistake. A properly compiled business plan is essential even if you don’t need money from investors or other sources.
A business plan is your outline of how you want your business to go. It shows that you know what you are doing and that you’ve got clear aims and goals, but also that you know what you need to do to get there. It will help you to stay on track, with long and short-term aims, it gives you focus and helps you to prioritize.
But it’s when it comes to attracting investors that your business plan really steps up for you. Pitching to an investor with an in-depth business plan shows that you are serious and professional. It shows that you know what you are doing, that your business has aims and plans in place to help you to reach your targets, and that you aren’t just flailing without a clear plan. It can make you a much safer bet.
Do Your Research
See your business plan as your research into your business, but don’t forget to research the other side. Read “How to Find Investors For Startups And Small Businesses” and learn more about anyone that you are asking for money.
Look at where they’ve invested in the past, and their morals. Look at the causes that they support and the things that they believe in and try to make sure you are trying to attract the right investors. Those that are a good fit with your company.
Tackle a Detailed Financial Forecast
If your business plan is a set of targets and plans for the future, your financial forecast is a deeper focus on the money coming into and going out of your business. It should detail what you are going to spend, and how much you are going to make and where that money is going to come from. You should make sure you factor in how perspective changes in the market and the global economy could affect your business and its takings.
Your financial forecast helps you to see when you are going to need to borrow money, and how much you will need. But only if you are realistic and honest with yourself. Presenting investors with a financial forecast shows them how their money will be spent and why you need it. They are much more likely to invest in a company that has a realistic view of their finances. That plans to borrow in advance and has a firm understanding of the finances of their company.
Get Stuck in with Networking
Networking is great for new and developing businesses. It gives you a chance to meet clients, customers, and suppliers. It’s an effective way to build what could be important relationships in the future, and it gives you a chance to learn more about the competition and the business world in general. It can also be an excellent way to meet potential investors or to get advice from other businesses that have been where you are.
Ask for Less
Investment can be a big and scary word. If you don’t need large amounts of money to get to where you need to be, consider breaking it down and asking friends and family for help. You should still do this professionally, show them your business plans and sign contracts.
But Ask for Enough
That said, not asking for enough can be a huge mistake. It can mean that you are asking for money again in the not too distant future. This increases the risk. If you’re continually asking for investments, even of smaller amounts, it looks as though you are wasting money, or you don’t really know what you need.
Put Yourself in the Investors Shoes
Ask yourself if you’d invest in your company as an outsider. Read through your business plan and your forecasts, learn about your company and honestly ask yourself if you’d be willing to take the risk of investing the amount that you need? If not, why not? It can be a good idea to ask someone else the same question to get a more unbiased answer.
Be Passionate but Professional
You’re asking someone to invest in your company. In you. You are the face, and you need to sell it. Know your business inside out. Speak about it with passion and knowledge. It’s crucial that you remain professional in how you present yourself and how you speak. Make sure your files are neat and organized, offer a firm handshake and present yourself well for the best results.
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