Tips for Raising Capital to Start a Business

The question of how to attract investors to a potentially successful new business has been one that has dominated the minds of many entrepreneurs around the world for years. The average entrepreneur doesnΓÇÖt have sufficient capital to start their own business, but finding an investor who is willing to back a project can often be difficult. Regardless of how potentially lucrative an idea may be, it may still be hard to find people willing to invest an in untried and untested new business idea.

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There are a few things that you will need to do to make your business plan attractive to potential investors, and here are a few tips to help you as you prepare your business plan presentation to ensure that it is as effective as possible:

  • Prepare a well-defined and clear business plan to present. Having all of your information laid out clearly is important, and it is vital that you do sufficient research before your presentation to ensure that your information is factual and accurate. Make sure that you have every phase of your business laid out clearly, as well as the timeframe for each step, the cost, and any other information that will be necessary. Include information about the competition that you will be facing in your market, your plan for advertising and publicity, and the strategies that you will use to take your share of the market.
  • Have an investor agreement written up for the investor to sign, but be prepared to make changes. Having a written investor agreement is the best way to ensure that everything goes smoothly with the investor, and makes things clear as to how much involvement they will receive for their investment. It also makes the process of divestment clear, and it will help to give you legal protection should your investor have ulterior motives. It will help the investor to see that you are well prepared and know what will be required of them, which will give them confidence to know that you are a partner worth working with.
  • It is vital that you keep track of the growth that your business experiences over a period of time. By tracking your growth, you are able to show potential investors the potential for future growth based on past expansion, and most investors prefer to invest in a company that is able to keep their growth to at least a steady minimum.

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  • Make sure that your companyΓÇÖs financial statements show that your company is doing well, at least well enough to interest investors. No investor will be interested in a company that is slowly going down the drain, much less one that is quickly spiraling into bankruptcy. Your company will need to show favorable numbers to attract the attention of an investor, and your accountant may be able to help you prepare a financial statement that shows positive numbers that will be able to attract an investor. Even if your company still has more expenses than income, many investors will realize that a company in the beginning stages take time to grow and may still be interested in helping your company succeed.

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