We all understand that starting a business is very expensive at the initial stage. And regardless of the field of activity, in most cases the costs will be:
- suitable premises;
- necessary equipment;
- finding employees.
Then, depending on the specifics of the business, other expenses will be required: additional software; renovation of premises; purchase of consumables and others. Moreover, in most cases, the initial costs are so high that it becomes very difficult to cope with them alone or even as a team. But in addition to the initial costs, many companies experience a lack of funds for full and harmonious development. There are often cases when the prospects of a young team are huge - their products or services become really in demand on the market, but due to a lack of finance, they miss out on the lion's share of profits. For example, they cannot hire additional employees, buy more equipment, expand the premises, and so on. That's when they need an investor in an existing business.
We came to the conclusion: companies need to find investors at the initial stage of development to cover the lion's share of the costs of implementing their projects. This is the main and most important reason why many aspiring entrepreneurs are looking for free funds. The second reason is the search for funds for development, expansion and implementation of any new ideas. This is typical for those companies that have found free funds for a start, but for some reason do not have sufficient funding for development.
Before moving on to the practical part of finding an investor, you should decide on several theoretical points. Knowing the investor's desires, you can understand how to look for him and what you need to offer him. When looking for an investor, it is important to remember one detail: investing implies making a profit. Every businessman who wants to interest a potential investor in his business should remember this rule. No one will be interested in an "innovative breakthrough", "original idea", "new technologies" if they do not promise tangible profit. You need to speak with each investor in the language of money and risks. Only then can you truly interest him.
Based on this rule, the following can be highlighted: to receive monetary investments, you need to convince the investor of the profitability of his investments; you need to prove why your project is more interesting than the projects of direct competitors; show what prospects you have for further development in the market. Investors who do this professionally can literally determine in 10 minutes whether a project will be profitable or not. And when they invest money in a business, they are not engaged in charity. The only motivation for investment is to get the fastest possible profit, which should be higher than not only the average bank deposit, but also the lion's share of competitors. It follows that the main task is not to find a private investor, but to interest him, convincing him to invest his money in your project.
Our contacts
We have sorted out the basic information about what you can tell an investor. Now about where to find an investor.
Close people, friends, acquaintances
One of the most controversial ways to raise funds. Suitable for creating a small business, promising acquaintances a return on investment when the business begins to generate income. At the same time, among friends and acquaintances you can really find like-minded people who may be interested in the idea, and create a whole team that can share all financial losses and compensate for each other's shortcomings. If you need a small amount, you can borrow money from relatives to start your own business, while there are guarantees of their return.
Funds
There are two types of funds that can help in finding investments for a business: small business assistance funds and small business assistance funds. Regardless of the type, it will be extremely difficult to get money from such funds. You need to interest managers in your business. And if in other cases an innovative idea, an advantage over competitors and a quick payback can exceed the average or even low profitability, then in this case the return on investment comes first. Investment funds are interested in only one thing - profitability. They are ready to invest their money with great risk in enterprises that will bring them a large income. But if a businessman talks about long-term investments without guaranteeing profit in the first few years - such a business is unlikely to be financed. To assess the prospects of their own investments, the fund will need time and maximum information that you can provide. The analysis will be carried out by a group of analysts, so the more information - the higher the chances of receiving funds. Investment funds are an association of many investors who invest free cash in order to make a profit. Moreover, these investment funds often have less funds than several private investors who are also ready to invest their money in interesting ideas, if only someone would interest them. But it is worth understanding that it is much easier to apply for investment in an investment fund than to a private investor, because in the first case you will just need to contact the company, and in the second - somehow find contact with a very famous and rich person.
Successful businessmen
One of the best and most profitable ways to find investments is to work with successful entrepreneurs of the city or region. Regardless of the scale, in the region you can find many successful entrepreneurs who have already gone through this path, have profitable enterprises and free cash. It is enough to interest them in your idea and your personality, and they will invest their money in an interesting project. At the same time, one of the obvious advantages of working with successful entrepreneurs is that they can teach and explain some of the things that they themselves have gone through. Many entrepreneurs are happy to take newcomers under their wing, explain to them how to cope with difficulties, minimize costs and make a profit. Especially if cooperation can benefit both parties in the long term. Cooperation is usually carried out on two terms: in the form of a loan; in the form of buying a share in the business. The second option is preferable for both parties. It involves the investor's participation in the development of the company, which allows you to avoid most mistakes and use the connections and connections of a more influential person to create your own business. If a businessman cannot help with finances, it is recommended to ask him who of his acquaintances can help and get interested in the idea. Such a small psychological trick will allow you to learn about other businessmen, and with a recommendation from one of your colleagues, you can count on something more.
Now, based on our understanding of why people invest in the first place, we can begin to answer questions about what might interest a potential investor. But first, we need to understand one simple thing:
You shouldn't think of an investor as a creditor for a business. He voluntarily invests his money, and if it fails, he won't get it back. That's why an experienced investor will become a partner for beginning entrepreneurs, who will help with minor failures and share success.
That's why you need to work not only for your own benefit, but also for the benefit of your business partner. You invest your ideas, efforts, time, money (to a lesser extent), and the investor, by investing his money, participates in making important decisions for the company. This is a kind of shareholder who has the right to vote, who is obliged to listen to, but his example is not always followed. It is very important to maintain a balance between the interests of the company and the investor. So, you have found a person interested in investing in your company.
What you need to tell him about the business:
The main idea of the business;
Required investment volume;
Expected return;
Risks.
This is all that the investor will need to know at the initial stage of your cooperation. When he evaluates the volume of the expected investment, compares the return and risks, and if he likes your idea, then the second stage will begin - a detailed survey about the business. This is when you will have to reveal all the details: why your idea is better than your competitors; how you are going to spend money and on what; when the business will expand and to what scale; what guarantees you can give and other questions. It is worth understanding that laying out all the trump cards at the beginning is not the best idea. It is quite possible that the person will not be interested in a business in this area, or he will be able to implement this idea himself.
