JoshIf you’re looking to attract investors to your business, you need to make sure you have everything in order so you can get the best deal.
Ensure you have a sound idea of the funding you’d like because there are many types of investors out there and it can be tough to understand the differences in how they operate.
If this is unfamiliar territory for you, seek external advice from venture capital experts. Many of them will be able to put you in touch with an array of different potential investors, opening doors that may not have previously been possible for you.
But before getting to that point, try to get on top of the following aspects.
Nail your financial model
Investors want to know what they’re getting into, so you’ll need to be able to provide forecasts for the next few years so they can see their potential ROI.
You’ll need to make the financial health of your business clear. An up-to-date and accurate balance sheet and cash flow statement, for example, will help with this. If they support what you’ve forecast in your financial model, confidence in the investment will be higher.
Reduce burn rate
A high burn rate may make potential investors worry that their funds could simply be frittered away without making a sufficient impact.
If you’re worried that your burn rate is too high, consider cutting back on expenses that don’t lead directly to increased revenue. Other options include:
- Trying to encourage repeat customers
- Focusing on your core offering
- Cutting products/services that aren’t selling
No matter how great you think your company is, if you’ve got a high burn rate then investors may see it as a sign that there is an underlying issue that needs to be addressed. This could be all it takes to put them off investing.
Differentiate yourself
When you operate in a crowded market, you need to push your USPs to show why customers should choose you over your competition.
It’s a similar case with investors – they need to see that your business has sufficient cut-through to become a market leader or hold onto that position. The last thing they want is to put money into a company that isn’t secure.
Get management ready to go
Make it clear that you’re ready to hit the ground running when investment arrives by having a strong senior management team in place.
It’s a good idea to have a mix of people with plenty of experience in the industry and others with a background in helping businesses grow.
Having the right balance will give investors confidence that their money will be put to use effectively and have the maximum impact. After all, for them, it’s all about getting the best possible return on their initial outlay.