Do you have a great business idea? Before getting the financing, you have to “do your homework.” We tell you how. If you were the investor what information would you research before you invest? Learn the three essential factors to consider when mentors making their investment decisions for you.
Many entrepreneurs feel the urge to go out and look for capital as soon as they come up with an excellent idea or at the first sign of growing their business. However, you must first believe in your company before asking others to believe in it. It sounds obvious, but it does not happen overnight.
Then you should try to “sell” the idea of your product and its potential consumers. Research and market tests. Get figures. Investors are drawn to entrepreneurs who can say to themselves, “If I spend $ X, I can get $ Y of profit.” If you can express yourself and also show growth figures for your company, you will find people who want to participate in your business.
In the entrepreneurial world, there is a terror statistic: 9 out of 10 startups are going to fail. That is the hard truth, so, first of all, you must prepare yourself to fail a couple of times. Be sure to “hold back,” keep an open mind and do the right research before approaching an investor.
Here are some useful steps:
1. Prepare the information
You can not control all the metrics and results of your company when you are just picking up the flight and, most importantly, you still can not guarantee a profit. But there are some factors that you can control, and you must have a strict control and follow them. You should have them ready by hand before you go out and look for financing.
Use the digital tools, from a focus group or invite your friends and family to try your product to make an examination of your ideal market. Piece by piece, you can go arming a business plan.
This data will give you the credibility to test prospective investors who understand the past, present, and future of your business.
2. Not everything works for everyone
There are many places where a startup can look for investments, but that does not mean that it is a simple process.
You need to know in advance who you want to approach. Research the history and portfolio of each investment portfolio to find the perfect partner for your business. It is essential that you know who you are going to talk to before you meet with a potential investor. Not only that, you know why this firm or person could be the perfect complement to your business.
It is also good to have references from your network of contacts, someone who can validate the quality of your person, equipment, and product and can speak well of your company to the investor.
3. The right place at the right time
The most important part of the preparation before looking for financing is knowing why your product or service will work. The big reason many startups fail is that they are at the wrong time in the wrong place. Many novice entrepreneurs refuse to test their ideas and investigate their market, primarily to measure the real “hunger” (demand) that their potential customers might have for their offer.
If you do not do your homework to find out what the real possibilities of your product are, then do not waste your time on an investor.