Launching a new product or building ‘startup‘ business ain’t easy. You may need external investment to fund your ventures. To get investors for your company is an ardous task in itself.
The following tips will help you (and me) start thinking about our approach to hunt for investor :-
– There are many sources of potential investment available to business and some of these may be unique to your business’s sector, size, location.
Investors are usually looking for opportunities close to market as these are less risky, but depending on how good an opportunity you present, you could get investment faily early on in the development of an idea or business.
Investors will usually want equity in return for investment, so if you don’t want to give up equity you will find it hard to get this type of funding.
If you need help developing a prototype you could always get a grant or loan instead but remember, you won’t get the same level of support or expertise that you would from an investor, which could make all the difference between success and failure.
This is also worth bearing in mind you consider who to approach.It also worth bearing in mind some investors may want to manage their own exit or even you exit from the business at some point in the future depending on their own objectives. You need to be clear about wha you want to help you identify the right investors for your objectives.
You need business plan ought to be able to articulate what it is that you are trying to achieve and by when, how you will achieve it. You need to know about finance, cash-flow, know-how, personnel, premises etc. This will also be difficult to predict, but it will help you make and test assumptions and to approach your venture with open eyes.
A good business plan will help you communicate your vision to potential investors in a language that they will understand and this will form the basis for future discussions and negotiations.
Some investors may offer support to develop a business plan, but they will have an obvious vested interst and may make your business appear weaker that it it in order to strengthen their own position.
Negotiation includes certain practices that can be taught and applied to any situation where two parties or more are bargaining with each other for what they want.
In the situation of negotiating investments for example, as an entrepreneur you will be looking to maximise the investment and support for your venture, whilst minimizing the amount of equity and power that you might have to give away to the investor.
It sounds obvious but consider the upper and lower limits that you will go to so that you know how far you can go and so that you can make hard decisions when you need to. Get a boook on negotiating and ‘gen-up’.
It can be tough negotiationg with seasoned investors who can put you off with quick numbers and hard bargaining. Don’t let this put you off and equally don’t be backed into a corner. It needs to be take extra time to think over offers, be prepared to make counter offers, or even go back and re-consider your plan if it is heavily criticised in certain areas ; are the criticisms valid.
Think win/win situation. If the investior is interested in your business but won’t negotiate in key areas that you want to negotiate in then may be you need to look for anothe investor. If in doubt get some independent advice.
One of the most important functions of a business plan will be to create interest among investors; therefore the business plan must be realisitic.
You need to be realisitic about assumed timescales, growth rates and your business ability and capacity to cope with that growth. One useful way to plan realistically is to have a ‘best case’ scenario and a ‘worst case’ scenarion and plum for something in between.
Having different scenarios will also help you and investors understand how you will plan for and mange/mitigate risks and changes in future.
Most investors considering a business to invest in will always consider the person fronting the business. It doesn’t matter how good an idea, produc or service is, or how much predicted demand/ profit. If you don’t measure up then they won’t invest.
So make sure you have a good plan and that you know it inside out. Show them that you have the tenacity and drive to make the most of their money, and the whit and robustness to succesfully identify and deal with changes as they occur. Tell them about other challenges that you’ve successfully met, and how you did this; how did you successfully buld a team, a sales pipeline.
Sell your strengths and know your weakness. Have a look at books on Neuro Linguistic Programming or ‘NLP’ for help with building rapport.
Source :- CTechInnovation