For entrepreneurs, sourcing investment for your new business can be daunting. Pitching your business to investors and asking for their money is a step into the unknown, and fear of rejection can even prevent you from pursuing investment entirely.
But you shouldn’t let your fears stop you from chasing your business dream. Read on to discover how you can overcome your small business investment fears and find the capital you need to get your business off the ground.
When you pitch your business opportunity to investors, it can be tempting to expect the world on a plate. You believe in your business and you know it has legs, so why wouldn’t investors think the same?
But the truth is, this approach will leave you feeling disheartened. No matter how much you believe in your business, there’s no guarantee that investors will feel the same way.
You don’t need to set your expectations low per se — just set realistic goals that make good business sense, both for you and your investors. Use hard data to back up your investment requirements, and clearly set out how your budget will be apportioned.
This doesn’t just help you set realistic goals for your investment pitch. It also shows prospective investors that your pitch is data-backed and well thought-out, and that’s money in the bank as far as your investment is concerned.
If you’re an avid fan of Shark Tank, then you’ll know that where entrepreneurs fall down time and time again is in their initial pitch. It doesn’t matter how slick their presentation style is — if their pitch is ill-thought out or badly-prepared, then the sharks are out.
And the same applies to your pitch. Prepare yourself for every eventuality. Cover all your bases and get the facts straight — if you know your pitch inside and out, then you’ll have the confidence to nail your pitch.
Test your pitch on friends or mentors. Encourage them to be truthful with you — this will highlight problem areas that you need to work on.
A business plan will serve you well here — indeed, it’s one of the most important things to consider when starting your own business.
When you write your own business plan, remember to keep it short but concise. Don’t lose yourself in the details — you can go into this in depth later.
You should also be realistic. It’s better to be cynical than optimistic here, as it will stand you in good stead when (not if) issues arise further down the line.
Remember to include financial data in your business plan too. Budgets, expected spend, income sources, and so on should all be considered.
Finally: know your audience. A business plan for investors needs to cover all possible problems that could arise in order to convince your audience that you (and your business) are a sound investment.
Investors don’t want to give their money to an entrepreneur who’s still wet behind the ears. They want to know that their investment is in safe hands, handled by someone who knows the challenges that starting a business entails.
Consequently, you need to show your investors that you know your stuff. But showing them a string of successful businesses can be tricky. Instead, cut your teeth with some low-risk businesses. Experiment with small-scale enterprises that require little initial investment.
Simple businesses such as an affiliate scheme are low-cost and low-risk — you could even scour online store marketplaces to purchase micro-businesses that you can fine-tune. These businesses won’t necessarily net you huge financial gains, but that’s not the point — it’s about provable experience.
A diverse portfolio of small-scale businesses like these shows investors that you have firsthand experience of the complexities of business and that you are willing to get your hands dirty.
Your prospective investors will have questions. Lots and lots of questions. If they’re going to part with their money, they want to know that their investment is as safe and secure as it can be, and they’ll actively look for flaws in your business plan.
But rather than waiting for them to raise these criticisms, acknowledge them yourself and provide solutions and assurances to address them. Be brutal with your pitch to spot any potential pitfalls that a prospective investor might pick up on, and develop a coherent response to each.
This shows that you’ve done your research and you know what challenges lie ahead. Beyond that, it shows that you are forward-thinking and realistic about your business plan. And for investors, that self-assurance is valuable and infectious.
Fear can be a paralyzing thing — but it doesn’t need to be. Follow the tips above, and you’ll craft a compelling pitch to investors that will get the capital you need to make your business dream a reality.