Many entrepreneurs dream of creating a thriving, successful company. While a few lucky business owners may find that they are able to meet all of their goals with minimal assistance or setbacks, that is not the reality for most entrepreneurs. At some point, business owners will find that they require additional funds to continue growing their companies. Bootstrapping methods are often the most practical to apply when the business is first founded, but loans from outside sources may become necessary to ensure adequate growth.
1. Solid Business Plan
Investors can afford to be choosey when it comes to deciding which companies to fund. A business plan that is outdated, incomplete, or unprofessional will make a poor impression on potential investors. An entrepreneur with a solid business plan will make a great impression on investors, which can lead to fantastic future opportunities. While anyone can research exactly what should be included in a business plan and how it should be presented, it is a good idea to have the plan looked over by other professionals to ensure nothing is missing and it is polished to the highest degree.
2. Positive Financial Projections
If a company is failing to entice customers or meet any of the sales goals, then it is probably not going to be attractive to investors. Experienced investors like Patrick Chung of Xfund know that there is an element of risk involved with investing in a new company. However, hard data that backs up future growth and increased profits will make investing in the company look much safer. Even if the company has only been operating for a few quarters, that data should be presented, along with future projections in several different scenarios.
3. Unique Product Line
Even the most energetic, intelligent, and hardworking entrepreneurs may have a hard time succeeding if the product or service being offered is difficult to differentiate from the competition. The quality, price point, and features of a product can all determine whether or not it will succeed. An idea that puts a unique spin on an existing product or an entirely new item altogether are more appealing to investors, as they are more likely to be noticed by consumers. Innovative products that are marketed correctly to customers have a lot of potential for growth and can lead to a huge increase in profits.
4. Cohesive Teams
Although the employees may not seem to have anything to do with whether or not investors will be interested in providing funds, that is not the case. The potential for financial growth is a big concern for investors, and they know that a company with a poor culture will likely perform poorly. As hard as business owners work to make their companies succeed, they must have a dependable team behind them to help make it work. Even if there are only a few people involved in the early stages, the employees should work together as a team. Any discord among workers or uncoordinated efforts will not only hinder operations but reflect poorly upon everyone involved. A motivated team that does not experience a high turnover rate will perform better, foster trusting relationships, and result in great company culture.
5. Clear Expectations
All entrepreneurs are different and have their own unique set of requirements. Some may prefer to work with an individual investor who will take an active role in the company and assist with the decision-making process. Others may want investors who want to act as a mentor without directly interfering in the daily operations. Once business owners have decided exactly what the ideal relationship with a potential investor looks like, they can start researching the available options and asking people in their network for referrals.
6. Existing Funds Are Used Sensibly
Squandering funds on frivolous items is a poor idea for any business owner, regardless of the size and success of the company. If all of the expenses are incurred with the sustainability and growth of the business in mind, that will look fantastic to prospective investors. Entrepreneurs should expect to justify all expenses both before and after any money has been invested, so business owners who already make good spending decisions will have a much easier time obtaining funds and enjoying an excellent relationship with investors.
Making the decision to work with investors is serious and should only be undertaken after all of the available options have been thoroughly researched. Entrepreneurs should make sure that they understand the process and are ready to make any necessary changes before pitching investors. A clumsy, unprofessional pitch can turn off investors and seriously harm an entrepreneur’s ability to obtain funding. By conducting research beforehand, presenting a polished business plan, demonstrating reliability, and having a superior product, business owners can improve the chances that the right investor will want to meet with them and provide funds.