Find an Investor for Your Home Business Barre VT
Find an Investor for Your Home Business
How to Raise Money from Investors
By Nora Caley
You benefit because you can raise enough money to grow your business, and the investors benefit by sharing in the business’s profits.
The trick is to find investors who are willing to take a risk on your company. Although some investors prefer to put their money into companies that are large and proven, others are eager to buy a piece of a newer, smaller company that they hope will earn them money.
Before you approach people, decide how much money you want to request. Write a business plan that indicates how much you need to buy or lease equipment, run an effective marketing campaign, and other expenditures.
When you ask for funding, focus on small dollar amounts. Don’t ask one individual to buy a large share of your company, unless you want to give up much control to one partner. Instead, try to get financing from several investors, thus spreading the risk. Some investors won’t put their money into a new endeavor if they think no one else will do the same.
Types of Investors
Some investors are successful business owners who have sold their businesses, have large amounts of money, and would like to get involved in starting or growing another business. Other investors are simply your family and friends who might have limited money and little business experience, but they want to see you succeed.
Both types of investors want to know how they will benefit from giving you money. Prepare a presentation that shows how you will market your business, how much revenue you expect the company to generate in the first few years, and how you will spend their investments.
Avoid sales clichés. Don’t tell people they need to invest quickly. Don’t use phrases like “once in a lifetime opportunity” or promise huge returns on their money. Make sure your presentation is free of all errors and typos. Use concise, clear language.
When you approach potential investors, make sure you are clear about whether you also want their advice or expertise. Some investors want to be able to take some control of your business. Others will want to be silent partners who don’t need to work next to you every day, and will be satisfied with regular updates.
How to Find an Investor
Start with your warm market, your friends and family. Then ask your friends and family if they know anyone else who might like to invest in your company. Ask your accountant, lawyer, banker, and others. If you are getting advice from a SCORE counselor or an expert at your localSmall Business Development Center, ask them where to find investors. Approach those potential investors the same way, with research and facts.
Then start networking. Reconnect with people with whom you’ve lost touch, such as former coworkers, acquaintances, and friend...