I have worked with entrepreneurs over the years and throughout that time one thing appears to them as their major obstacle to growing their business to the state envisioned from the beginning. It’s funding. Sadly, only 5 percent of entrepreneurs get funded. Does that imply that only 5 percent of ideas generated are good enough to be successful?
In some cases, there are other reasons for their inability to expand their businesses but there are also those that have not been able to expand operations because of low funding. Packaging your business to attract the necessary funding from investors is a skill that comes with experience but can be learned too – not in an hour though. If your business is at this stage, then these few tips would help you package your business to obtain the investment you’re looking for.
Clean your House
Don’t attempt to invite someone to your house if your place is messy. The first thing an entrepreneur must do is to make sure that the business that you’re inviting investors to come and take a bite is wholesome. The business must be financially viable, or at least has potential to be profitable. Investors don’t mind buying into businesses that are not presently profitable, but are very much concerned about its future financial viability.
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Institute Structures and Processes
Investors don’t invest in businesses that are heavily dependent on your personal abilities and presence alone, unless you’re a musician, footballer, biker etc. Usually your business should have structures and processes that will guarantee continuous operations even when you are not available to work actively. Your business doesn’t have to be big before you institute appropriate structures. Employ people and teach them how to work even when you are away, open a bank account and don’t keep all the money to yourself (personal account), follow a recruitment plan, document your goals, policies and strategies. It is in these structures, processes, people and products that investment is made. Showing that the business is all about you and you alone, and as such cannot run without you, could turn away investors.
Don’t try to Sell other ideas
Many entrepreneurs are in a hurry to show off their ability to come up with ideas and in so doing run all their dreams by prospective investors. It’s not too bad but it appears like a sign of lacking focus. It’s as if you want to experiment everything that comes to mind. Investors are not looking to gamble or experiment with their funds. They are looking for real businesses to invest in, not ideas. Stick to your business and present that alone – at least for now.
Keep the Books
How do you prove the viability of your business to prospective investors, if you don’t have accounts? Your accounts and financial projections are key to obtaining funding for your business. It’s at the heart of your offer to investors. Keep financial projections conservative and realistic. Don’t over-promise. If you don’t know how to prepare the books, get an expert to do that for you. It’s worth the fees.
Are you investable?
Ask yourself whether or not people will be willing to ‘buy’ you as the leader of your business. You should have a personality capable of running the kind of business you are presently running and hope to continue running when you get the investment. Investors want to know if they can trust your leadership with money, and you should possess the appropriate qualities.
Get a Business Plan
The business plan is the single document that markets your business to investors. You need it. Your business plan must be professionally written and packaged to tell the right story about your business and its potential. A poorly written business plan is only a rip off as this won’t take you anywhere despite paying for it or wasting your own time on it.
Investors won’t find you, find them
Many people go about their normal activities and yet tell me they’re looking for investors. You won’t find investors by going about your usual business. You must go out there and look for them. Use the internet to search for investors interested in businesses like yours, contact bankers and venture capitalists, attend relevant for a, showcase your business online and offline. It’s only in few cases that an investor will contact you, and express interest in your business. Even with that, the rest of the work is entirely up to you.
Give your investors an ‘Exit Strategy’
Investors are comfortable with you and your business when there is a clear exit strategy. Carefully plan what would happen if the business failed and how investors will get their money back – a portion if not all. This is one of the major considerations made by investors. They want to know they won’t lose it all. People pledge assets of the business and grant investors the first right over them, others find other smarter ways.
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