Thursday, April 26, 2012
Investors are vital to the success of a start-up business. It takes plenty of capital to get a start-up business off the ground. There are a few steps start-up business owners can follow in order to find and maintain good relationships with investors.
1. Turn Ideas into Action
Investors may not be as excited about your revolutionary business idea as you are. A business plan and model are important when courting start-up investors but results and action speak louder than spreadsheets and mission statements. Even if a start-up business is 100% cash-poor, steps can be taken to get value-oriented investors to take notice. Social networking, for example, presents start-up businesses with a little to no cost marketing opportunity. Visibility and the interest of potential customers will give investors the impression that a start-up business is viable.
2. Network & Research
Investors that can help fund a start-up business do not fall from the sky. It is important to know where to look for possible investment funds. The first step is to approach friends, family members and colleagues. Many current successful ventures got their start thanks to contributions from supportive loved ones and business associates. Business schools with investment programs, classes, trade shows and industry events are some other ways to find viable investment sources. A few hours spent researching the business community near you can point you toward these resources.
3. Invite to Participate
Most investors want to participate in the start-up business they are helping to fund. While courting investors, be clear about how involved in the business they want to be and how involved you’re willing to let them be. These expectations should be laid out prior to any money changing hands.
4. Protect Your Reputation
Investors who support start-up businesses often communicate with one another. While fall-out with an investor does not mean the end of your start-up business, repeated instances of soured relationships or disappointments can alienate other investors. Protest the reputation of your start-up business through organization, preparedness, reliability and honesty.
5. Communicate the Return
An investor wants to know they are going to get a return on their initial investment, no matter the success or failure of the start-up business. While it can seem pessimistic to plan for the potential downfall of your business, it is important to show investors how they will make their money back. An exit strategy worked into a proposal will display practicality and realistic goals to potential investors.
Many start-up businesses rely on investor contributions for their capital. By following a few simple steps, start-up business owners can find and keep reliable investors.
Danny provides services to help small to medium companies improve and generate more cash flow with his invoice factoring company. His receivable factoring service can raise capital for struggling businesses.