Five Steps Toward Attracting Investors for your Business

30 May Five Steps Toward Attracting Investors for your Business

Forget the idea that if you build it, they will come. Investors are not likely to be knocking at your door, no matter how solid your business idea. But there are several steps you can take to identify the most likely investors and prepare for attracting that much-needed capital:

1. Prepare a solid business plan. It might seem obvious, but before you can hope to secure outside investors, you need to prepare a thorough, well-researched business plan with valid financial assumptions. Be sure your statements about the market, competitors and projections can all be backed up by your research. Be sure your plan is professionally done, includes an executive summary and marketing plan.

2. Invest in Yourself.┬áIf you aren’t willing to have some skin in the game, your potential investors are likely to hesitate as well. Until you have been able to accumulate a significant sum of money to invest in your business, you shouldn’t attempt to engage potential investors. On the other hand, if you are able to let investors know you are shouldering substantial risk, they will be much more receptive to putting their own money on the line.

3. Have Your Financial House in Order. This step should be intertwined with some of the other steps, such as building your business plan. You need to have an excellent handle on all aspects of your finances before you approach a potential investor. If you will be applying for business loans or grants, consider doing so prior to looking for outside investors so you portray an accurate overall financial picture. When making financial projections, be ready to adequately respond to any questions with fact-based answers.

4. Network, network, network. There is absolutely no substitute for networking with business people. Start by attending local business and industry receptions, workshops an conferences so you can distribute business cards, introduce yourself and start establishing those connections. While these local contacts should be your first priority, don’t dismiss online connections through business social media sites, inquiries to reputable investment groups or other online connections. As with all dealings on the Internet, play it smart.

5. Be ready to present your request. Exchanging phone calls and emails are fine for getting the ball rolling, but be careful not to let this informal, and often infrequent, communication drag on too long. Once a potential investor has expressed interest, ask for a face-to-face meeting. You should then be prepared to do a full presentation, complete with visual aids, copies of your business plan and, if applicable, a product demonstration. Describe your own investment, and the skills of your management team and consultants. Be prepared to be very specific about your capital needs, both in amount and intended use.

Following these steps can build the foundation for putting your business or new venture in the best position for attracting outside investment. While it can be tempting to cut corners or skip ahead without laying the necessary groundwork, you run the risk of ruining your chances with investors and harming your professional reputation.


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