Starting a business or expanding on an existing business can be a very rewarding process and the potential financial gains are highly alluring for budding entrepreneurs. Putting yourself out there to investors in the short-term can be quite an expensive venture though; nonetheless it is a worthwhile investment of your time if you can successfully secure an investor.
Many entrepreneurs do not have the start-up capital that is required to birth a successful business, because of this; it makes complete sense for any entrepreneur to seek out investors to partner with. In many cases, investors are difficult to locate and even more difficult to convince with your business ideas once you find them. Here are a few common mistakes that business owners should avoid if they want to be able to successfully secure an investment.
Not Using Graphics
When trying to secure an investor, most businesses will have to pitch their ideas in a presentation. One of the biggest mistakes made here is when the pitch is comprised of all talk and text, but lacks vibrancy; it is important to include graphical or video accompaniments when presenting business data - put your brand and ideology across to investors - just don't shove too many cartoons in their faces at once. Using graphics helps investors visualize your ideas and helps them to understand the commitment to your brand - something which they may ultimately become involved with. A presentation should not however, be all style and no substance. Investors are naturally attracted to confident people, but if you are only confident and lack the juicy statistics that investors crave; then they are unlikely to be interested in your all flair and no numbers approach. Make sure to give them solid figures and account for any misgivings along the way to cover any concerns that they may have- plan for the worst outcome and hope that it never happens.
Being Too Optimistic
Entrepreneurs and small business owners should definitely have confidence in their vision and its potential, but they shouldn't be too optimistic when pitching a business idea; Angel investors and venture capitalists are bombarded by entrepreneurs on a daily basis - they all think that their idea will be the one to skyrocket them and their investors into affluent lifestyles. Everyone thinks that they have a great idea, while very few actually do.
Try to be more realistic with actual projections instead of just fantasising about numbers, investors will appreciate your transparency in doing so - remember they want facts, not to be impressed. Most investors do not want to see the best case scenario of a business plan; moreover they want to know what the worst case scenario is with your business plan and what contingencies you have in place to minimise damage and risk.
Having Hard and Fast Projections
Another common mistake that entrepreneurs make when pitching a new business idea is to have hard and fast numbers in a presentation, with no room for change or flexibility. A better approach to this is to have a spreadsheet that can be adapted during the presentation; investors will likely ask to see different scenarios in which the business isn't operating at maximum profits or efficiency - plot different formulae into spreadsheets to account for questions that may be asked of you.
If these mistakes are circumvented, entrepreneurs will be more likely to be able to secure an investor. Mainly it is about secure and clean risks when looking at business investments from an investor's point of view, having a firm plan and business model will increase chances of closing the deal. The points covered may seem obvious, but could potentially be the difference between the business failing dismally or having triumphant success, it is up to you what guidelines you choose to follow.
Written by Ellie Boyd, video and writing journalist for Paydayangels.co.uk- A UK based company, providing information, interactive tools and money management guides along with reveiws on payday loan companies. Follow on twitter @EliseMBoyd