So you have decided to approach outside investors for the money for your business, and you are expecting it to be easy, right? You just rock up to have a few meetings, and they will see how awesome your project is and be begging you to take their money by the end? Well, maybe not. In fact, securing funding from outside investors is quite a bit more complicated than that. Luckily, we have some advice for you; detailed below.
Planning is always worthwhile
Business plans are not just hoops to jump through or pieces of paper that help you coalesce your ideas. They are, in fact, a vital element of getting any funding from an outside source. This is because they have the ability to show to someone that is not familiar with your product or business just how it could make them money. This is, of course, vital if you are going to convince anyone to invest. Meaning your business plan needs to be sound, accurate and clearly presented. In fact, by doing this, you can greatly reduce the need for questions after you have presented the plan, as a good one will pre-empt most of them, and deal with them before your investors get a chance to ask. That is why a great business place is an essential in the investing process.
Next, have you considered getting your company incorporated? Why? Well being incorporated can actually increase your chance of securing outside investors for your business. This is because it’s a more formal system, and this provides potential investors with the guarantee that they will have access to certain information about the decisions you have made. Making it less of a risk for them to invest.
To become incorporated there is a particular process to go through, one you are best guided through by a registered agent that has previous experience of the system. Something that is well worth doing if you are looking to secure big bucks to make your company as successful as it can be.
Realism is crucial
Lastly, when seeking funding from outside sources, it is vital that your requests and expectations remain realistic. What do we mean by realistic? Well, the agreement has to benefit both you and the investor. Yes, you may see the potential of your product and know that it will be a hit as soon as hits the market. However, most inventors think this about a product they have come up with and in itself, this is not a guarantee of sales success. That means the investor is risking their capital by giving it to you. To make this risk worthwhile, they will want to negotiate an attractive package when investing. Usually, one that gives them a fairly large share of your company.
Yes, this can be something that is very difficult to hand over, especially if you have started thing from the ground up. But remember, without that investment your business with never take off or make you any money at all. So don’t shut out investors because you think they are asking for too much. Instead, negotiate to the point that you feel is fair, as then you have a win situation for you, and for your investors.