Fund raising is one of the most important processes in the development of any new or a growing company. It is essential to note that with the right preparation, you can increase the probability of getting the required finances. This article will provide you with a guide on how to prepare your business for investors so that they can invest in your business.
Step 1: Develop a Comprehensive Business Plan
Business plan is the first and the most important tool that you should develop when seeking investors. It should also describe your business strategy, your customers and their needs, your competitors and your expected revenues and costs. Make sure to provide sections on the short-term and long-term objectives, operation plans, and marketing plans. This is important to investors because they wish to see that you have a good plan that shows how you are going to succeed and make profits.
Step 2: Understand Your Financials
This is why, when it comes to your financial statements, the key is to know them backward and forward. Develop comprehensive financial statements like income and expenditure statement, cash flow statement and balance sheet. You should be prepared to justify how these numbers were derived and how the investment shall be used to fuel growth. This will help in establishing credibility with the investors as you show them your financial performance.
Step 3: Identify Your Funding Needs
It is important to describe how much capital is required and for what purpose it will be used. When seeking funding, it is important to be precise on the amount needed for a particular activity or function, for instance; product development, marketing or hiring employees. Requesting the right amount of capital proves that you understand your business requirements, as well as its potential for development.
Step 4: Research Potential Investors
Not all investors are the same; some are more suitable for your industry or business model than others. Investors: It is important to analyze the potential investors to have knowledge of their backgrounds, their investment type and their previous investment records. Be sure to adapt your approach towards this and show them how your business complements their investment portfolio.
Step 5: Build a Strong Management Team
It is a well-known fact that people invest not only in ideas, but in the teams as well. The next step is to ensure that one has a qualified management team with a variety of skills and experience. Ensure that you emphasize on the skills, experience, and competency of your team members in the business proposal by pointing out how they will contribute to the achievement of the business plan. A good team can go a long way in increasing the confidence investors have in the enterprise.
Step 6: Create an Engaging Pitch Deck
A pitch deck is crucial when it comes to presenting a business to investors or any other interested parties. This presentation should be a brief snapshot of your business plan with the focus on the problem you address, your solution, market size, your competitive advantage, revenue, and required capital. Make it short and interesting, the idea here is to entice the investors and get them to want to know more.
Step 7: Practice Your Elevator Pitch
Step 8: Network and Build Relationships
It is advisable to establish contact with the potential investors before going for funding. Go to business fairs, become a member of business clubs, and network with investors on social media such as LinkedIn. It is easier to approach them once you are ready to pitch when you have established rapport with the intended audience.
Conclusion
To prepare your business for attracting investors, one has to consider the following factors. A good business plan, understanding of your business financials, identification of funding requirements, research on the potential investors, assembling a good team, preparing a good pitch and practicing your pitch, and networking will help you when presenting yourself to investors. When you are well prepared and believe in your vision, you will be able to secure the funds needed for the development of your business.