6 Ways to Attract Potential Investors

There’s no way to start a new business without having some money to put into it. Unfortunately, most wannabe entrepreneurs do not have the savings to start a new venture on their own. That’s why finding the right investors is so important. An investor can put the financial backing to your idea that you need so that you can start making your vision a reality. For an investor, they are hoping that they can recoup their initial contribution along with a share of the profits. 

There are several benefits to having investors beyond the cash infusion they can provide. For one, most investors have built businesses themselves and can offer you valuable mentorship and guidance. Plus, an investment isn’t the same as a loan. The payback requirements are not as strict, so you can focus on building your business responsibly rather than worrying about your next repayment. Investors can also put you in touch with valuable partners through their networks that they’ve cultivated over the years. Unfortunately, while investors are important, they can be hard to come by. Here are six tips to attract potential investors to your business. 

Networking

The old saying goes, “it’s not who you are, it’s who you know.” Networking is a powerful tool for finding people to invest in your business. That means you must make yourself visible to local investors as often as possible. Attend chamber of commerce and other local business events. Get to know people and what they do. As you become more known and trusted, you can start talking to others about your business proposal. This technique is not about giving a hard sell. It’s about playing the long game and building up some social capital until it’s an appropriate time to discuss your business. Investors want to know that their money is in good hands, and if they know and trust you, you will have a leg up. 

Show Some Results

Investors want to know that there is a good chance they will be able to recoup their money. What better way to give them confidence than to show them some results you’ve already gotten? You don’t need to invest much in getting one or two customers. They can be people you know or that are particularly interested in your type of product or service. Once you have some customers, you can pitch your potential investors with this early success as your proof of concept. This is an especially important strategy if you are a new entrepreneur and don’t have a history of successful businesses behind you. 

Business Protection

When someone invests their money, they want to know that it will be protected as best as possible. Even if you have a strong business plan, something unexpected can happen that will cost you a lot of money and potentially put you out of business. You could get sued for personal injury, you could have an accident with a company car, or a storm could damage or destroy your inventory. While you may not be able to prevent these things from happening, you can mitigate the financial fallout from them. You need to make sure that you have protection against anything that might be a risk to your business. You can find policies tailored for you and your type of business to have the coverage you need. Potential investors will appreciate the protection and see that you are professional and prepared. 

Ask Experts For Advice

This is another soft-sell technique that works better than cold-calling. If you are going into business, ask around to other entrepreneurs you admire to see if you can get some advice and guidance. You aren’t asking them for funding; you are simply asking them to contribute in another way that doesn’t cost them anything. This can start a dialogue, eventually leading to a discussion about investing. No matter what, there is a benefit to you since you will be getting valuable guidance. It will also create experts who are engaged with your business and more likely to be open to investing down the road. 

A Strong Business Plan

Nobody can predict the future, so investing is very much a gamble. If you cannot provide investors with realistic projections that make sense, then they won’t give you their money. Therefore, before you set out in search of investors, you will need to sit down and craft a strong business plan. This will map out your case for why your business will succeed. It will also provide a road map for everything you are going to do, from product development to marketing, to staffing and everything in between. An investor needs to see what you will do and how you will do it before they trust in your vision. 

Keep Potential Investors Up To Date

You probably won’t get a bite on your first ask with a prospective investor. However, you will need to keep dialogue to get them to commit eventually. First, you need to let them know where you are in the process of building your business. Then, follow up with them regularly and provide any updates and news you think they would like to hear. Let them know what their money could do and how it could benefit them. Keeping them in the loop will keep you at the top of their mind, so you aren’t forgotten against a possible sea of other suitors. Finally, if you get a commitment, thank them profusely and ensure they know how valuable their support is to your business. 

Good investors can mean everything to an entrepreneur. If you can’t go it alone, an investor can make your dreams come true and share some of the financial risks of any new venture. However, it can be hard to find people who want to put their faith in you and then get them to commit to you. With these tips, you can attract investors and explain why you are an excellent choice for their money.