In the current entrepreneurial market, it can be difficult to get business investment. Without business investment, it can be quite tricky to get your company lifted off the ground.
Therefore, it’s important to understand the tactics to take to try and get investors on board. Maybe you have a business idea, and you need a large sum of cash to put the idea into play. Perhaps you’ve implemented your business plan but can’t carry on until you get some funding. Regardless, it’s important to get investors onboard at some point in your business endeavours.
For start-ups, most of the time you’ll use your own money for your initial funds, where 77% of small businesses rely on personal savings. 33% of small businesses start with less than $5,000, but don’t fall into the trap of thinking that this is enough. The average small business needs at least $10,000 of startup capital to be successful.
Let’s start off with understanding why business investment is important…
Why is business investment important?
Getting business investment can be important for several reasons. First and foremost, it can provide the necessary funding to help your business grow and expand. This can be especially important for start-ups that may not have the cash flow or revenue to support significant growth on their own.
Investment can also bring valuable expertise and connections to your business. Many investors are experienced businesspeople who can provide valuable advice and guidance, and they may also have connections in your industry that can help your business succeed.
Finally, business investment can help increase the credibility and perceived value of your business. When investors are willing to put their money into your business, it can be seen as a vote of confidence, which can make your business more attractive to customers, employees, and other stakeholders.
If you’ve ever watched an episode of Dragon’s Den, you can see all of these benefits in play. People get investors onboard not only for their money, but the “Tech Tycoon” Peter Jones’ experience certainly can act as a great marketing tool for a tech business looking to become the “new thing”. Get investors onboard, and customers will soon follow.
Overall, while there are certainly risks involved in seeking investment, the potential rewards can make it a worthwhile endeavour for many businesses.
What are the different types of business investment?
There are many different types of business investment, and the type that is right for your business will depend on your specific needs and goals. Some common types of business investment include:
- Debt financing, which involves borrowing money from a lender, such as a bank, to finance your business. This type of investment typically involves the repayment of the loan with interest.
- Equity financing, which involves selling a portion of your business to investors in exchange for capital. This type of investment allows investors to share in the profits of your business.
- Crowdfunding, which involves raising money from a large number of individuals, typically via an online platform. This type of investment can be a good option for businesses that want to raise small amounts of money from a large number of people. Crowdfunding is becoming increasingly popular, with a global estimated value of $12.27 billion in 2021.
- Angel investing, which involves seeking investment from high-net-worth individuals who are willing to invest their own money in your business. These investors are often looking for high-risk, high-reward opportunities. Angel Investing can be an exciting opportunity for some, with these types of investors making an average of 14.7% return when investing into startups.
- Venture capital, which involves seeking investment from firms that specialise in providing capital to high-growth businesses. This type of investment is typically reserved for businesses with significant growth potential. Don’t worry if this isn’t your number one investment strategy though, as only 0.05% of startups raise venture capital.
The type of business investment that is right for your business will depend on a variety of factors, including your industry, stage of development, and financial needs. It’s important to carefully consider your options and choose the type of investment that will best help your business grow and succeed.
What do investors look for?
There is no one-size-fits-all answer to this question, as investors have their own unique criteria for deciding whether or not to invest in a particular business. However, there are several factors that investors typically consider when deciding whether or not to invest in a business.
To begin with, investors will typically look for businesses with a strong potential for growth and success. This can include businesses that have a clear and compelling value proposition, a well-defined target market, and a solid plan for achieving success.
In addition to growth potential, investors will also look for businesses that have a solid financial foundation and a clear path to profitability. This can include businesses that have strong revenue streams, a solid customer base, and a proven track record of financial performance.
Finally, investors will also consider the potential risks associated with investing in a particular business. This can include factors such as the level of competition in the market, the potential for regulatory changes, and the overall stability of the business’s industry.
The steps to take to get business investment:
Here are some of the important steps you should take if you’re wanting to get any investors onboard:
- Develop a strong business plan that outlines your company’s goals, target market, competitive advantage, and financial projections. Investors will want to see that you have a clear vision for your business and a solid plan for achieving success.
- Research potential investors and target those who are likely to be interested in your business. Look for investors who have experience in your industry or who have invested in similar companies in the past.
- Network with potential investors and build relationships with them. Attend industry events, conferences, and networking events where you can meet potential investors and pitch your business.
- Use social media and other online platforms to connect with potential investors. LinkedIn, for example, is a great place to connect with investors and showcase your business.
- Be prepared to answer questions and provide detailed information about your business. Investors will want to know about your financial projections, market potential, and competitive advantage, so be ready to provide this information in a clear and concise manner.
By taking these steps, you can increase your chances of attracting the investment you need to grow your business.
What if my business isn’t currently operating?
It is possible for investors to invest in your business even if you are not currently operating. However, it is important to keep in mind that investors are typically looking to invest in businesses that have a strong potential for growth and success.
If your business is not currently operating, you may have a harder time convincing investors that your business is a good investment opportunity. Focus on building a fantastic business pitch which can really convince an investor.
How do you plan on getting business investment?
We hope this post helps you get business investment, so you can grow your company. Have any more suggestions? Give us an email at info@rekkruut.com, or let us know on our LinkedIn or Facebook Pages!
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