Opening a business requires start up capital, and unless someone has all of the necessary funds well in hand that typically means that they have to get outside investment. While it might sound easy, particularly if someone’s business has success written all over it, getting investors to hand over cash to help grow the idea into a reality is not as easy as it might appear.
Have A Plan
The first step to getting investors interested is to create a business plan. This plan needs to include research on the business’s competition, how much it needs to get off the ground, where it will be located, what licenses are required, etc. In short the business plan should show investors that the future business owner is an individual who has carefully worked out every angle, and who knows what is required to get the business going.
The plan should also contain expected monthly expenses, and a projection for what earnings should be like. This provides an estimated profit, which is something that investors are definitely going to want to know about. Once all of the bases are covered the entrepreneur should be able to show this business plan to a prospective investor and have all of his or her questions answered.
Learn How to Present Your Plan
No matter how good the plan is, investors need to have confidence in the business owner. Charismatic leaders garner a lot more confidence from investors than those who may have numbers on their side but who lack conviction or presence. As such it’s a good idea to learn the business plan inside and out, and to know where the numbers are even if they aren’t memorized completely. The more confident one is when discussing a business plan, the more positively investors will react to that plan.
Check All of Your Options
When it comes time to find investors it’s important to check all of the options one has available. While going to a bank for a business loan might seem like the most obvious choice, there are other options available. If one has family and friends who are involved in the business world it’s a good idea to see if they, or people they know, would be interested in investing in this venture. If one is a member of a professional organization then it’s also a good idea to use those contacts as well. Networking is important for finding investors.
With the advent of websites like Kickstarter it’s also possible to engage in crowdfunding efforts to come up with cash. While typically used for things like books, games or movies, these projects can be anything. If coming up with starting costs is all a business owner needs, then it isn’t a bad idea to see whether or not the general public really wants you to open your doors and start providing services.
In all cases though it’s important to understand what investors expect as a return on their investments. Interest rates on loans, prizes for kickstarters, etc. all need to be decided upon up front and figured into costs.