Gaining investors for a brand new company is like performing gymnastics at the Olympics. Contestants spend years studying the art of gymnastics, training their bodies to bend just a little bit further, their bones to endure just a little more weight, and their muscles to sustain just a little stronger body formation. They know every part of the body and how to make it work towards a greater score from judges. Investors can dissect you as critically as Olympic judges can, and they do so with excitement. In this scenario, you are the gymnast, and the investors are the judges. How will you score with them? How can you get a perfect 10 and gain their trust in your abilities? Let’s dissect this process as thoroughly as the investors dissect you.
Step 1: Publish Your Business Plan
Your business plan is the foundation of your business. Without it, you might as well say goodbye to investors. Having a business plan that is thoroughly vetted by numerous, knowledgeable people is vital to its success. The U.S. Small Business Administration is a wealth of knowledge to those who are looking to write business plans and start businesses. Here, you can learn all that they have to offer.
Step 2: Solidify Your Team
Having the right people for the right positions in the major job roles in your company is a make or break deal. These people should have:
- People skills,
- Public speaking abilities,
- Extensive industry knowledge,
- Finances, and
Step 3: Latch onto Mentors
These people can be trusted lawyers, investors who might not invest in your company, successful entrepreneurs, or experienced, industry-related professionals. These people can offer you a wide array of advice that can speak to gaps in your services/products, a lack in your marketing plan, a loop hole in your business plan, or the like. Having this valuable knowledge from these mentors proves gainful in your ability to lock in investors.
Step 4: Define Your Target Investor Audience
Would you want Joe Schmo to be your investor or a seasoned professional, who is knowledgeable in your field and has a sizeable amount of money to deal with? I think the answer is clear–Joe Schmo. I am kidding! Anyone would want to have an experienced professional with a sizeable portfolio and industry knowledge to come on board their “Investors Team.” Things to consider when creating your target audience of investors are the following:
- Do I want these investors to be nearby my business’ location or in a far off area where I hope to expand?
- Do I want this investor to be like a venture capitalist, investing not only money, but time in meetings and conferences and effort in seeing the business through?
- Do I want an investor who is only involved to the extent that I see him at quarterly board meetings?
- Do I want to use crowdsourcing websites to gain capital?
- What types of rewards am I looking to give to investors? For regular investors, they may want equity in the company, a yearly return on investment, or stock in the company, for example. For crowdsource investors, they may want fun gifts or free experiences paid for by your company. This is a little more creative, so you can have fun with this.
Step 5: Pitch, Pitch, Pitch!
There are so many things to do and consider before looking for investors. However, once you have all you have put in all the back work, you are ready to reach out to potential investors–whether individuals, teams, or firms–and pitch your business. Here is a great resource on how to create a rock solid business pitch.