Securing an investment in your small business can be a huge boon to growth and provide you with a trove of resources that you never had before.
However, not every owner comes across the day when he or she receives that investment. Finding an investor takes some intelligent planning and knowledge of what people and companies with money to spend find alluring. According to Inc., the investors on Shark Tank always look for a product they have a personal interest in for two reasons – they find investing more enjoyable that way, and their experience will lead to more money.
For advice on how to find backers, and communicate your small business' value to investors, read on:
1. Make sure you sell it
You can have the greatest idea in the world, but it's not going anywhere if you can't explain it in an enticing way. You will have to compile a selling strategy that both communicates how valuable your business is and meets the investor's criteria, the U.S. Small Business Administration noted. There are three steps to this, the first being research. If you don't know what a possible backer is interested in, how are you going to communicate the potential of your business to him or her effectively? Use the research in order to tune your pitch to the desires of the investor. Make sure that you have a financial plan for long-term growth and can convincingly explain a potential for earnings.
2. Where are you at?
There is a difference between investments made by a venture capitalist, and those growth investors are interested in, Inc. explained. If you're still typing off of the MacBook sitting on the tool bench in your garage, you may not be the target of a growth investment. For small businesses that are established, and simply need an infusion of cash to take the next step, it will be important to explain precisely where your overall growth stands, and how much you will need to proceed. You don't need to be raking in millions in order to be considered, just make sure your business has a fairly solid footing and is generating some sort of revenue in order to begin attracting growth investors.
3. Finding investors
An investment will require finding an investor to fork over capital. If you have a strong enough network, this shouldn't be too difficult, the Small Business Administration stated. There are several areas you can look in to find potential backers. Try your local business community, trade organizations or state's economic development agency in order to learn where to find investors.