Starting a business is fun until you need to finance your idea. While it might seem scary to search for financial assistance, but if you’re able to put your idea in front of the right people who believe in your idea, they will assist you in providing the funds you need to build your dream. Before you approach potential investors, you need to understand the role of an investor and exactly what they expect from you and your business idea. Here are a few important tips to take into consideration:
Do a background check on them
When you approach a specific investor or lender, you need to have a clear understanding of their background. For example, who they’ve worked with before and what type of experience they have in funding businesses. It’s important to know that they are a successful, thriving business and are able to assist you. If you are approaching someone specific in a company, it’s even more important to go the extra mile and learn more about the individual. This will help you to understand the type of person they are, and it will also make the sales pitch easier when you know who you’re speaking to. At the end of the day, you are selling your idea to someone who will hopefully “buy it”. Personalise your approach according to the person on the receiving end, as that will help you to appeal to the investor’s interests. If there are any concerns or issues that might arise during your pitch, having some knowledge on their background will help you to communicate with them on a more personal level about your business.
Look at previous investments of theirs
During your research process, you will learn about the businesses your potential investor has invested in before. This will give you an understanding of the type of business they’re interested in and want to contribute to. For example, you cannot approach someone who invests in security software with your quirky product that can assist with travel automation and queries. You need to align your needs with someone who wants to help businesses like yours grow. Pitching your idea to the wrong person is not going to solve your problem, so make sure that you’re approaching the right investor for your business.
Make sure you’re ready for an investment opportunity
When you learn about your potential investor, you will need to secure a meeting when you are at the right stage in your business. Every private investor or investment business has their own requirements that they favour, and this usually refers to your business’ growth. For example, does your potential investor want to invest in businesses during the seed stage or the early stage development of a business? Many investors want to be able to see an established business whereas others want to invest in the startup idea and help your business grow in the beginning stages. It is not recommended that you approach a company if your business does not fall into their investment interests so be sure to do your research.
Choose according to the investment amount
The next step in your process is finding how much your potential investor or lending company is willing to offer you. This all depends on what you are seeking finance for in your business. For example, if you need to buy equipment and machinery with your funds, you will need to see how much you would qualify for beforehand. Use an online asset finance calculator available to South African businesses to see how much you would qualify for at your preferred lender.
Believe in yourself and your business
The amount you see on the asset finance calculator is not always guaranteed. So, don’t give up on yourself or on your business idea for that matter because of what you see or think you might only be able to qualify for. Do your homework and make sure that you put yourself in front of the right person or company. If you are a first-time finance seeker, this is going to be an overwhelming experience, but practice makes perfect.