The biggest mistake that small business owners make is thinking that they have to go it alone. Sure, if you own a small business, you’ve probably had to sacrifice almost everything you own to get it off the ground. However, you may not be aware that it’s possible to get more cash flow coming in by attracting investors.
Showcase your strengths as a business
The very first thing that you need to do is show potential investors why they should invest in your business. That means if you own a brick-and-mortar business, that it needs to be in tip top shape when potential investors walk through the door. Your business needs to be clean and your workers must be busy. If you have a dirty business with people standing around, no one is going to invest in your business.
Another thing that you must realize is that first impressions are the most important. Schedule a meeting with potential investors and make sure you are firing on all cylinders. Your best and brightest employees should be on hand and you need to make sure everything is in line. Every employee needs to know how important this person is and they need to act accordingly.
Prove that you’re capable of doing what you claim
Let’s say that you own a landscaping company that you are seeking investors for. It’s vital that you take your potential investors out to actual job sites so they can see what you’re doing. Walk them through past jobs and show them what you did for the customer. Also, it’s a good idea to show them your employees in action so they can see that you’re hiring people who are capable of delivering what you promise.
If you own a bakery, invite the investor to taste some of your pastries. The proof is in the pudding, as they say, and investors want to make sure that you’re able to deliver what you promise. It’s easy to win over an investor by knocking their socks off with the presentation of what your business is doing.
Be realistic when discussing the investor’s returns
Investors can be greedy people, but you don’t want to promise the moon if you can’t deliver it. An investor is someone who has probably been around the block a few times, and they know if something is too good to be true. You need to think about what you are going to offer the investor in return for their money.
It can make you feel uneasy to offer up a slice of your business to someone who is doing nothing but give you money. After all, your small business is built upon the sweat of your brow, but you’re in a tricky situation right now. If you don’t get the money from investors, you could be stuck in the current situation you’re in, and that might mean you are not living up to your fullest potential.
Some investors will want a slice of the action, while others will want you to repay them with interest. Seek out the type of investor that fits your business plan the best and try to work with them. It also doesn’t hurt to ask the investor what they expect in return so that you’re both on the same page.
Draft up a solid business plan that shows how you’ll use the money
Drafting a business plan is far more important than you realize because it will help you down the line attract more investors. You may not need a business plan to get one investor, but if you’re seeking money from several investors, you’ll need a plan.
Hiring someone to draft a professional business plan is a good idea. It sounds far more complicated than it is, and you can find people to do it for you online. Your business plan is merely an outline of where you see your business going. It’s a way of communicating with the investor and showing them that you have a plan in place that will take you from where you are to where you need to be.
Investors can be a fickle group
People who have the money to invest in a small business usually are those who are, well, fickle. They’ll go through everything with a fine-toothed comb and check it all for flaws. If there’s a single problem with any aspect of your pitch, plan, or business, they’ll likely pass on investing in you. Make sure you’ve got all your ducks in a row before seeking investors and things should go smoothly.
