One of the biggest factors that affect the success of a new business venture is having adequate funding to cover the cost for operation, research and expansion. Entrepreneurs who need to augment capital may be curious about seeking out investors whether in the form of friends and family, debt financing, venture capitalists or angel investors. While it is not uncommon to outsource capital infusion, attracting investors require much preparation.
1 : Present the Unique Selling Proposition
Flashnotes.com allows you to buy and sell notes by students on different subjects taught by different professors. When Mike Matousek pitched the idea on the TV show Sharktank, members of the panel scrambled to get it. Why? Because the idea is unique.
Excite your potential investors by demonstrating that unique selling proposition that sets your business apart from the others. One of the most common mistakes startups make is the failure to identify what is that thing (or things) that makes their idea the better one. Gain the confidence of investors by showing that you are the expert when it comes to your product, your market, and your industry. Most of all, you need to prove that you have a solid relationship with your clients.
2 : What is the Need of the Market You Fulfill
Adidas is about innovation, Nike is about heart. Coke is about family, Pepsi is about edge. PC is for the geeks while Apple is for the jocks. Even the biggest brands know that the quality of their product is not enough. They must be able to identify a need of the market that their brand will fulfill and you are not an exception.
3 : Numbers
Twleve years ago Nick Swinmurn approached Tony Hsieh with an idea to open an online shop that will sell shoes. Swinmurn left a message on Hsieh's answering machine. The two have never met and Hsieh was about to erase the message when Swinmurn dropped a number. He said there it is a $2 billion industry, an untapped industry. Hsieh called Swinmurn the same day and agreed to invest on what is now known as Zappos. Nine years later, Zappos was valued at $1.2. Numbers, that's what made the difference.
4 : Invest
Before Larry Page and Sergey Brin approached Andy Bechtolsheim, they weren't even incorporated. What they had was the code and a working site. That code is what is going to be the foundation of a company we now know as Google. Google was already a working program when the two started looking for investments. It was already a search engine. Investing your personal assets, in any shape or form that is valuable, in your business is indicative of your commitment and will convince investors that you are serious about your vision.
5 : Prepare an Attractive and Realistic Business Plan
It is important to determine exactly how much money you will need, what you will be using it for, when you expect to spend it, how you expect to get it back and when. Much as many investors hype on making them passionate about the idea, the one thing they will surely fall in love with is good numbers. They are not in their positions if they don't know numbers so know yours.
It goes without saying, you should, more than anybody else, believe in what you are doing. Getting investors is not easy. Steve Jobs got turned down by almost every investor he approached when he was starting Apple but he believed in what he was doing too much to give up. You will most likely get turned down too. You need to believe in yourself enough to prove them wrong.
