For most small business owners, how to find financial investors is often an important consideration to finance growth. With a wide range of options available, research is key in knowing what opportunities are out there and how to access them.
To start with you’ll need a well-thought-out, detailed business plan that can demonstrate to potential investors that you have expert knowledge of your business and have set realistic goals. It will help to establish your financial forecasts and ROI, which can then be supported by your diligence across company cash flow, key cash metrics, and gross profit margins.
Business loans, personal investment, and support from friends and family are long-established options as they offer a fast way to gain capital to get your business off the ground. However other options are growing in popularity, due to increased accessibility and opportunities across a huge range of sectors.
Outside investment opportunities – gaining cash and expertise
As you explore how to find financial investors, there are several ways to gain a cash injection from an outside source. Business angels are high net worth individuals that invest money, but also often bring resources and knowledge to your business. Although they often seek a high return on investment, that means they have a strong incentive to support business growth and success. Many household names began with angel investment, including Amazon and Apple.
Another option is to seek investment from venture capitalists, this is suitable for those looking for a larger sum of money, and usually later in the process (whereas angel investment usually occurs with start-ups). Venture capitalists are usually made up of professional investors.
See more options in our Finance Growth section
When considering investment options, it’s a good idea to include those that are suitable for more volatile economic climates, this stands for both securing investment and the investment landscape as a whole. It’s useful to get clued up on different types of investments using CFDs to identify all opportunities available to you in entering the markets, but also the lie of the land for those investments you secure for your business.
Support from established schemes
Business incubators, accelerators, R&D grants, and enterprise schemes all offer a range of financial support, often backed by government funding. It’s also worth speaking with your accountant about R&D tax credits. These schemes are often perfect for those looking to scale and grow their start-up and can offer training and expertise as well as financial insight.
Short-term and guaranteed loans are one of the most popular ways of gaining investment as they can offer a reasonably quick and simple process and you do not have to offer up any stake in the business.
Although getting investment from friends and family is one of the most tried-and-tested models to raise capital for a business, it does mean you’re opening up those investors to the same risks you face. It’s important to be clear on this point whether the investment is just that, funds injected that will offer the other party a share of the business, and they’ll recoup their investment when the business turns a profit. Alternatively, friends and family may offer a loan, repayable on terms you both set out.
In any case, the key to gaining successful investment of any type is having an airtight business plan. This is how you demonstrate your understanding of the market and the role of your business, product, or services within it, and how investors will feel sure that it’s the right place for their capital.