Secrets About Getting Investors
Finding investors for your business can be challenging. Investors are smart and weigh the risk and rewards of investing in anything, and a new business can be risky. As a business owner, you’re responsible for making your business idea sound exciting and attractive so investors will want to partner with you.
There are many different types of investors, from family and friends to venture capital firms. Here’s what you should know about getting investors.
Get Results Before You Start Looking for Investors
Investors want to invest in a product with proof of concept. The more data you have on your business and the more sales, the easier it will be to find investors that want to help you fund your business. Unfortunately, this makes it difficult for businesses that are just starting. Instead of trying to get investors right away, create a product and start selling it so you can show potential investors results.
If you’re another type of business, consider an alternative business model so you can get funding for your business while improving on the product. You should never try to find investors without having a good product people want to buy.
Consider Objections
Put yourself in the investors’ shoes and try to come up with reasons why they’d object to investing in your business and your product. While it can be difficult since you built your business from the ground up, you need to consider all of the reasons they wouldn’t want to partner with you to go through the list and start answering objections in your pitch.
You should also prepare yourself for questions investors might have, such as how many products you’ve sold and how you’re marketing your business. Investors will want you to be confident and prepared for anything, so by trying to predict what they’ll want to hear about; you can make them more likely to become an investor in your business.
Don’t Skip the Networking
Finding funds can be stressful if you don’t go about it the right way. An easy way to start pitching your product or your business is by networking, which allows you to get your business out there and in the minds of other professionals. Networking events allow you to meet people in your industry and learn tips and tricks. Many people may also know how to help you get investors if they believe in your product.
Consider Offering Stocks
A stock that pays dividends can help your investors get cash flow instead of risking their long-term equity. By offering immediate rewards, you can make investing in your business more attractive. You should always be specific about the amounts invested, and what the projected dividends will be so you can show them sample reports about how much they’ll make.
Always Be Transparent
A deal with an investor or broker can completely fall apart if they find something out about your business you weren’t truthful about. Be prepared for investors to do their homework about your business and look at all of your information before they decide to sign any paperwork. For example, if you have any outstanding business loans, your investor will need to know the amount and when it will be paid off.
By being transparent, you won’t put yourself in a situation where an investor will back out.
Create a Pitch
Investors already know the benefits of investing, such as the fact that investment-related expenses are tax-deductible and can be calculated with professional tax software, but you need to create a pitch that demonstrates the benefits of investing in your business, not just investing.
A good presentation about your business and your product is key. Try to provide as many visualizations as possible and create a persuasive pitch deck. Investors have seen thousands of pitches, so try to make yours stand out.
Get a Seed Investor
Focus on getting just one investor at first. This person will be able to open doors for you that you never knew existed and can even help you find other investors if needed. One good investor is all many businesses need to get off the ground and make their business a success.
Your seed investor doesn’t have to have much involvement in your business, but if you can find a hands-on investor, you can ensure that you’ll have someone with business knowledge who can help you grow.
Investors Care About the Human Aspect
While your investors will ask you questions about your business, such as how much money you’ve raised so far, if you have any debt, and what your revenue is, they will also need to learn more about you as an entrepreneur. Investors care about the companies they invest in, but they also care about the people. After all, if they don’t have faith you can build a successful business, they won’t become your investor.
Make sure your investors understand your dedication. You can have a great product, but if the investors don’t believe you’re willing to do anything to make the dream a reality, they won’t offer you a deal.
While many investors may choose to simply give you money and walk away, others prefer to get involved to ensure they get a return on their investment. They’ll need to make sure you’re someone who will listen to their advice so the business can grow. If an investor loves your product but doesn’t think they can work with you, then there’s no reason for them to give you any money.
Final Thoughts
There are many different types of investors out there. The best thing you can do for your business is not jump at the first offer that comes your way. Instead, find an investor that truly believes in your business. Do your research on investors to see if there is someone who you believe can help make your business a success. If you’re starting a unique business, like a podcast app, find the right investors that are knowledgeable about your company and believe in the success.
Consider the level of involvement you’ll need from an investor. Many of them are busy and won’t be able to pick up the phone whenever you call, but others will be willing to help your business grow by partnering you with the best manufacturers and distributors.
