By Alex Lawson
If you’re about to seek an investment, you want to know for sure that you’re going to get it. You want to walk in to meet an investor as prepared as you can possibly be. You need to ascertain that your business is a good investment opportunity before you start pitching yourself, and you can do that by viewing your business as an impartial observer. Here are seven signs that will tell an investor your business worthy of their capital.
1. You’re Always Busy
If you’re serving dozens of customers a day, it’s easy to prove that you’re solving your customers’ needs. If you can walk an investor into your business and have a hard time trying to figure out where you’re going to sit them down to talk to them, an investor is going to notice this. Every person in the building means money being generated for your business, and if you need some capital to help you expand, the investor will clearly see why.
2. Your Reports Show Profitability
A lot of profitable businesses seek an investment so that they can remain profitable and afford to pay people during a large expansion. If you want to open up a second business in a neighboring town or expand into eCommerce, it will look great if your annual reports show that you’ve been consistently fetching a profit. It shows the need for growth capital.
3. You’ve Recently Received Good Press
If an authority is speaking positively about your business, even if it’s just the local news, this is usually a sign that things are about to pick up. You’re gaining exposure and recognition that will draw in new customers and interest from neighboring communities. An investment could help you maintain your momentum, and investor will see this as a sign that very lucrative things are about to happen.
4. You Have a History of Innovation
If you’ve already shown that whatever you’re doing is groundbreaking, and you’ve seen success in profiting off of your innovations, an investor is going to be eager to hear what you have to say. Investors love disruptors – they always want to beat others to the punch. If your strength resides in innovation, investors will take you seriously.
5. You’re Not In a Cash Emergency
The best time to ask for money is when you aren’t in dire need of it. Investors are often wary of struggling businesses that need money. They’re seeking a bailout, and investors become skeptical. If your current plan isn’t working, will you be wasting their money? If things are going good with cash, you’re a good candidate for an investor.
6. You’ve Proven You Can Do It On Your Own
Investors get scared when they feel necessary. If you’ve already proven you can navigate your business without an investor, even if progress happens very slowly, then you’re on stable ground for an investor. They won’t be worried that they’re going to lose their money.
7. You Can Write a Comprehensive Plan For the Money
If you can detail how much you need and what you’ll spend it on down to the last dollar, you’re preparing the perfect business plan to show an investor. It means you’re asking for a reasonable, justifiable amount. Investors won’t feel like you’re arrogant or greedy if they understand what your plans are.
Finding Your Money
There are all kinds of investors. Big money investors, small money investors, and investors who prefer to work like mentors — all serve different purposes. First, find out how much money you can reasonably ask for. Investors calculate their offers or their response to your proposal similarly to how a mortgage broker would calculate a reasonable home loan. You can use the same calculator to work your facts and figures.
Then, you can either seek investors through networking or specialized investor networks. Specifically seek out people who would be prepared to consider the amount of cash you need. You can network online, at industry events, or by directly approaching investors you already know with a pitch. Just make sure they’re open to hearing it before you start.
Alternatively, you can take a bunch of small investments from family and friends. Doing things this way sounds simpler, but it may actually involve more work. It’s a lot to keep track of, and borrowing from people you know may put you in an awkward position. Be sure that your family and friends can legitimately afford what they’ve invested.
No matter how you seek funding, you’re unlikely to get it overnight. As long as you’re an ideal candidate for investment, you’ll get what you need. Just stay patient and positive.
