Rather than a shortage of potential investors, it is more likely that those unsuccessful at finding new business investors just need to hone their skills when it comes to investor relations.
It takes a lot of nerve to ask someone for money. Whether it’s a bank or a private business investor, you are asking them to trust you with their money, their future.
First, you need to be confident about the business that you trying to persuade them to invest in. You also need to be able to portray that confidence to your potential investors.
But potential investors aren’t going to give their money to someone just because they can talk a good talk. You’ve got to enter your meetings, with new business investors, armed with all of the information you need to convince them to invest.
Business Plan
This step is often skipped by new small business owners, but it is vitally important if trying to secure new business investors. Writing a business plan is not rocket science, and there are a few key components that should be included.
You will probably have to do a little research, but any time invested in writing a good business plan could translate into more funding for your business.
Here are some of the items that should be included in your business plan. Depending on the type and size of your business, there are other items you’ll need to include, but this short list should help you get started.
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Mission Statement: What is the long term mission of your business? Find a way to state it clearly and as briefly as possible.
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Business Concept: What is your business all about? Describe in such a way as to leave no doubt about what services or products your business will provide.
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Competition: Discuss any competition that your business will face. It may seem foolish to you to do this, but it will show that you have done your research and have developed strategies to be successful even in the midst of competition.
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Goals: What are the short term and long term goals of your business? Don’t include only financial goals, but also goals about growth of the business or expansion plans that you may have.
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Financial Issues: Explain your pricing strategy in detail. Show your potential profit margin by listing expenses versus revenue. This should be fairly detailed.
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Marketing Strategy: Provide details about how you plan to market your business. Include ad concepts, as well as any other strategies you have developed to position yourself in the marketplace.
The Presentation
Once you have a solid business plan, you will be ready to make your presentation to potential investors.
When entering this important meeting, it’s important to have done your homework. Know your business plan inside and out. Be prepared to discuss numbers, competition and marketing in detail.
You MUST sound like you know what you are talking about or no one is going to trust you with their money.
Also, your personal credit history is going to be an issue. Be prepared to provide details of your personal finances.
Investor Relations
Once you have created a good business plan and secured the investors that you need, develop strong relationships with them. If they have money to invest, it is likely that they found their own success along the way.
Develop relationships with them so that you will be able to ask for advice and learn from mistakes they may have made.
Developing positive investor relations can contribute to the success of your business. Business investors probably know other investors. With one word of recommendation, they can help you secure additional funding that you may need in the future.
Keep your new business investors close, and garner as much knowledge as you can from them. Doing so will be one more link in the chain of building a successful business.
