How to get people interested in investing in your company
Often great business plans are never realized because of a lack of investors. If you have a great business plan and are thinking about enticing some investors here are a few tips to help you in this endeavor.
Develop your business plan-if you are going to try to sell a plan to anybody, it needs to be well developed. The first thing you will need to show to potential investors is an itemized start up budget. Investors have an interest is exactly what the money is going to be used for. The more detailed your budget is, the better it will look to investors and the more likely they will be to give you the money. Besides nailing down a budget, you should be able to show an organization chart for business management, what the competition is doing, and how your business will be advertised and marketed. Do your homework when drawing up a business plan. Not only will it help to entice investors, it will also serve as a blueprint when you do get the money and you finally start the company.
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Get the word out-if you are starting the search for investors, you should talk to all your trusted family members and friends about the business and your investment needs. Chances are good that you don't have a close friend or family member with the kind of capital that you are interested in. If you did, you would probably be drawing up contracts and not reading this. However, everybody knows somebody who knows somebody. If you contact your inner circle and each member of your circle recommends your investment opportunity to their inner circle, soon many people you don't even know will be aware of you. This networking strategy is a great way to access a number of potential investors.
Be prepared with an investor friendly offer-investors are typically interested in ownership or partial ownership for their money. You should think about the options that you could offer to potential investors. If you are okay with selling off your own ownership, you might offer shares of the company. If you are taking this road, be prepared to provide a formal shareholder's agreement, which details the terms of the investment. You might also want to set up a phantom-ownership situation. With phantom ownership, you maintain ownership and all voting rights but you investors can "own" up to 15% of the company. This means that when they are ready to withdraw from the investment they will be paid out 15% of the worth of the company. This is a good idea if you have a positive cash flow and want to maintain complete control. Another offer that you might make to potential investors is a seat on the board of directors (plus the financial return on their investment). Sometimes people are interested in managing the companies that they invest in. Talk with potential investors in order to make your investment opportunity appealing.
Use the web-just as you can post your resume online with employment companies like Monster or Indeed, you can also post your business proposal. There are several sites including Go BIG and Capital Connexion where you can post your proposal online for potential investors to see. If you are using the web to find potential investors make sure that you have a professional looking proposal. This might be something that you want to hire a consultant for because the better your proposal looks; the more likely you will be to find the investor that you are looking for.
