Attracting Investors

When I ask an entrepreneur what their biggest hurdle is the answer is overwhelmingly “money”. It never fails.

Let me start by making an outrageous statement: Getting money is never a problem.

Once you have done the work to ensure your business has the tools to be successful, you won’t have problems finding money to grow your business. Let me start by explaining some of the basics every entrepreneur should address and have ready before seeking investors or loans to fund their business.

1. Is your business in compliance with your state?
Have you obtained all of the necessary licenses needed to do business? Have you filed all of the appropriate paperwork with your Secretary of State? If not, your local and state governments don’t even recognize you as a legitimate business. How do you think an investor would feel? – disk defragmenter

2. Have you done the basics to make sure your business is in compliance with the lending markets?
In today’s credit market, vendors are closely examining each business before granting them credit. Remember, Silver State Funding Services can not only ensure your business is attractive to vendors/lendors, we can ensure you’ll have the exposure with them to get you lines of credit.

3. Who’s on your team?
Before hunting for investment, you need to ensure you have selected the team that will make this business prosper. True leaders surround themselves with people smarter than they are. You want a financial expert, operations expert and marketing expert on your team as a minimum. Have them write bio’s and resumes. This will be one of the first things an investor looks for.

4. Do you have a business plan?
Every business owner needs to have a business plan. There’s no excuse not to. You can hire someone to do the plan for you, or write it yourself. The business plan also needs to clearly address how much funding you will need to bring your offerings to market and fund the business through cash flow positive. However, you can also put together a more informal plan that will outline your operations and your financial goals for your business. This is called an “operational plan”. Every business needs an ops plan and it should be updated every month.

5. Have you done market analysis?
You need to research your target market to ensure your product fits an established need. During the research, you’ll most likely discover you need to tweak your product and your approach to market it to better fit your target market. You need to offer something that addresses a recognized need for your customers. Market research not only helps you discover that need, but also determine how big the market is. This is where a professional business plan can help.

6. Prove it works!
One of the biggest fears investors have is investing in a business that hasn’t proven its products or services. Money is tight early on, but you need to do a test of your offering. Go sign up some customers on a small basis and prove your business model is a winner. When you sit down with potential investors, you will receive a much warmer response if you’ve already documented sales and prove there is a desire for your offering. You also will most likely have to give up a smaller percentage of your business when bringing in an investor because they will see less risk in the venture.

If you have addressed the issues above, you stand a much better chance at getting funding. The idea is to show the lender or investor that you truly understand the landscape your business is operating in.

Before looking for investors, make sure all 6 items are met. Having this work done before meeting with an investor shows you not only understand your business, but have the foresight to understand the challenges it will face.