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6 Ways to Attract Investors to Your Small Business

Posted 03 December 2020 | BY Sansan

When running a business, financing is necessary, especially if you’re planning on expanding your business operations. Getting your business ideas off the ground and turning them into something tangible requires funding. When doing business, it’s always important to consider the funds you have on hand. If you lack the funds, finding investors willing to contribute financially is worth a shot. 

Here are six practical ways you can try to get investors to put money into your business ideas:

1. Have a Business Plan

Once you get a great idea that would do a great business, the next thing is to craft a business plan. This will guide you in how you’ll enter the market you’re planning on selling your product in and the strategies you’ll use to make your business idea profitable. Your plan doesn’t have to be fixed, but it needs to show a concrete picture of where the business will be heading. 

At the very least, you should create a business plan that shows where the business will stand in five-years-time. You could go into detail on what you’re planning for the first year of business and include financial forecasts and market analysis. As you prepare for the second year and so forth, you can provide general detail about how you continue to run the business.  

2. Research Your Investors

When you’re planning on getting investors for your business, it’s vital to do your homework first before approaching them. Have they invested in a similar product or company like yours before? Do they have the same philosophical views as you? You’ll have better chances of attracting an investor whose interest closely mirrors your own.

While not all the information about your investors will be made public, it’s important to get to know them personally and professionally before meeting with them. Visit their website, read their biography, seek internal connections, and/or ask around. One way or another, you’ll be able to get information about your investors, which you can use to attract them into your business.

Showing your investors that you took the time to get to know them before the meeting also shows your enthusiasm and passion as a business owner. This will give them the impression that you’re serious about your business idea. 

3. Throw a Great Pitch

The first step in attracting investors is getting their attention. When you’re looking to get investors to help you fund your business idea, it’s vital to prepare a convincing pitch that will pique their interest. This is where an elevator pitch will come in handy, especially if you’re meeting the investors for the first time or talking to potential investors in business events. 

Your elevator pitch, as the name implies, should only take as long as the length of an elevator ride (20 to 30 seconds) to present. It should have all the exciting details to get your potential investors to think that your business idea is, indeed, a worthy one to invest in.

You should get an idea of how to structure your pitch from your marketing research. Once you get their attention, you can then schedule a meeting to discuss the business idea in detail.

4. Test Your Business Idea

Most investors wouldn’t want to risk their money into something without seeing proof that it will give them greater returns in the future. If you want investors to believe in your brand as much as you believe in it, show them results. This could mean doing extensive market research to have proof that your product is in demand.

You could also sell your services or product first before seeking out your investor’s help. Once you’ve established a significant customer base, you can use this to show your investors that people are interested in your products or services and are willing to spend on it. 

5. Emphasize Your Selling Point

More than that, make sure to show potential investors what makes your product unique. In other words, show them your products’ unique selling point. For example, HelloFresh makes a bold statement of being “America’s Most Popular Meal Kit” and follows it up with “offering most recipe variety and meals starting at $7.49.”

If you’re just offering “best meal kits in the country,” there’s a high chance that it won’t attract customers, and thus, investors because it doesn’t answer the general question of what makes it different from other meal kits.

Looking for your unique selling point doesn’t have to be complicated. The key is finding even the smallest difference that can differentiate your product from that of your competitors.

6. Give Your Investors a Choice to Participate in the Business

When you’re looking for investors to fund your business, you have to prepare for the possibility that they might want to participate in your business, too. Especially if you’re pitching to angel investors, they may become your mentor and adviser as you work on strengthening the foundation of your business. If so, give them the chance to choose whether they want in on the company or just want to stand in the background.

Finding an investor that will take part in your business will work to your advantage, too. If you land angel investors, their years of experience will help provide something tangible to the company and contribute to its success.

Final Thoughts

While there’s no sure-fire way to guarantee that investors will support your business idea, the tips mentioned above will help increase your chances of getting them on board.  With the increasing competition today, it’s vital that you get all the funding that you need to keep your business ahead of your competitors.

Take time to prepare your pitch, get to know your investors, and make sure that your product is unique. No matter how simple, these tactics will help you present a business idea that investors will find profitable and worthwhile.


Guest Author

sansan-guest-poster-danaDane Panes is a writer for SMB Compass, mainly focusing on business loans, strategies, and marketing tactics. She loves sunsets, stars, coffee, and mountain top views.