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How to attract investors for your small business

Starting a small business can be a challenge, and finding the finances to fund your business is perhaps the most challenging part of it. You may struggle to attract investors, whether these are Angel investors or banks. However, if you follow certain steps it will help you attract the appropriate investor for your small business idea.

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In order to secure funding for your small business idea, you must ensure to get a deal that is suitable for you. You are likely to get offered deals that are the most suited to the investors, however you have to evaluate to see if the benefits outweigh the negatives. Here are a few ways you can make sure that you are making the right impressions, and are working towards securing funding.

Business plan and pitch

You must have a well written, organised and concise business plan that will highlight all the main parts of your business. Your business plan should cover the following to give a good idea of what and how your business will operate: competitors, objectives, the USP (unique selling point), sales forecast and a budget. All this important information needs to be backed by solid research. A well developed and written business plan will show potential investors that you are proactive in actually learning about starting and running a business. If you have little to no experience in writing a business plan, then don’t hesitate to seek professional help. A business plan is a vital document for any business, therefore seeking out a business consultant to help you draw up a business plan is a good investment.

You will also need to have a pitch, which can be a short verbal version of your business plan. If you are new to the small business sector, and have no experience in delivering pitches, then get practicing. Practice pitches beforehand and make sure that you sound eloquent, aware and well prepared when it comes to delivering your business pitch.

Networking

Networking is possibly one of the most important ways to attract investors and just getting the word out about your business. Networking will allow you to pitch your business idea in a setting that’s not too daunting or intimidating. Standing up in front of two or three potential investors in a room and delivering a pitch can be nerve-wrecking, whereas when you are at a networking event you can be a little more relaxed when pitching your business idea. Networking will allow you to deliver your pitch in a natural and organic manor, and will enable you to build a relationship with the prospective investor.

To get started, begin networking within your local investing communities, as this will be the initial step in talking about your business and sharing your ideas. You will have to network often and make sure to attend relevant events for a chance that may lead to you gaining the right investor for your business.

You can also network through social media, primarily LinkedIn. It will help you connect with relevant people in the industry as well getting to know potential investors. If you build yourself a good profile, investors may come to you.

Market research

You need to make sure that you are well-educated on the market and the industry through conducting extensive market research.  If you are making statements that are vague, then it will seem like you haven’t taken the time to carry out a significant amount of research. Whether this is in your business pitch, plan or at a networking event, it will make you seem unprepared, so it is important to put the time and effort into it in order for you to come across as serious about your business venture.

You will need to be carrying out market research even before you have your business idea in place. So make sure to get into the habit of carrying out market research whether this for your business plan or for developing new products.

Give and take

You need to sell your idea to potential investors, and the way to do this most effectively is by highlighting how they will benefit from investing in your particular business. You are going to have a lot of competition in trying to get funding for your business, therefore you need to make the deal worthwhile for the investor. You also need to be clear on what you want and need from the investor and what you will be giving to them in return. You will need to find a good balance, and see what ‘best for both’ kind of proposal you can put forward.

If you are investing your own money into the business from savings, then mention this. It will let the investor know that you are willing to bet on your business idea and dream. Most investors want to see that you will invest in the idea so they will be more likely to invest with you.

You will also need to find an investor that is right for you and your business. It is worth thinking about what you want from an investor beyond the finances to fund your business. You may want or need an investor that will play the role of a mentor, especially if you are new to the industry. You may want an investor to help you get connected, they may introduce you to their contacts leading to more opportunities. You will need to take into consideration the business relationship you want from your investor and pick carefully.

These are just some of the ways in which you can be well prepared and equipped to ask for funding, and for finding the right investor for you and your business. Take time to work on your business plan and pitch, making sure that it is backed by solid market research.

More on funding your small business and business finance here.

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