Business Ideas from FinallyFast:
When it comes to raising money for your business, don’t expected any miracles. An investor is not going to swoop out of nowhere. In fact, many investors will already know you or be introduced to you through a mutual friend. This is partly because investors need to have confidence and trust in you in order to take a risk on your business. But when potential investors are ready to listen to you talk about your business, you must be properly prepared to reinforce their trust and assuage their concerns. Here are the steps you need to follow in order to pitch your business to an investor.
An elevator pitch is vital. Verbose presentations and lengthy explanations will not impress investors, and most likely will turn them off. Present your business in a manner that’s short, sweet and to the point. Investors need to be confident that your business will attract and retain customers. If they don’t grasp your concept in a short time span, they may presume that customers won’t understand it either.
Keep a one-page executive summary on hand. Some investors prefer to read instead, and a summary will quickly convey what you need investors to understand. You can send them the business plan as a follow-up if they’re interested.
Show Them The Numbers
Inspire confidence with facts. Most investors seek out low-risk businesses with proven managers that are as close to guarantees as possible. A company with cash flow, and a track record has a better chance of getting investors than a business plan forecasting large returns. Find ways to test your business’s viability on a shoestring budget, and turn your idea into a functional business before you seek investment.
Respectable investors will not take you seriously if you present them with nonsensical financial graphs that claim your company’s revenues will grow from $100,000 to $50 million in three years. Show investors that you have a grasp on reality with three versions of financial projections: best case, moderate case and worst case. Base each of these models on facts, past and present performance data, industry and competitor analyses and a series of well-thought-out, defendable assumptions.
If you want an investor’s money, you’ll need to prove that you are a fiscally responsible manager who knows how to get the most out of a buck. Give yourself wiggle room in your operations and marketing budgets, but avoid being excessive. Never ask for a large salary or big-budget perks. Investors want you to be in a position where everything is on the line.
Prove how well you can create, manage and fulfill demand for a single product. Demonstrate that your business can crawl before you say it can walk. Perfect your marketing tactics, sales strategies and operational procedures. Investors appreciate companies with sustainable step-and-repeat business models that are poised for exponential growth.