As you know that entrepreneurs need to drill down into the details of their sales and distribution strategy. What distribution channels and partners do you plan to use? How long does it take to close a sale? How much does it cost to acquire a new customer? Such details will help to instill confidence in your investors.
Stocks are probably the most well-known option, but picking and choosing individual companies to invest in is not how most people get involved in the market. Bonds investments in which you loan money to a corporation or government at a fixed interest rate is another major asset category.
Often small-business owners focus on the wrong things when trying to show their track record. You need to pinpoint specific business achievements. What products have you developed? Which major clients did you attract to your previous employers? How much revenue did you bring in? Investors are always looking for measurable evidence.
For many investors, a company's employees are as important as its product or service "that people part is often what gives the whole enterprise credibility. Focus on the experiences, networks and expertise your team offers. If you are a one-man-show or do not have the resources to hire anyone yet, show investors you have specific plans for attracting talent.
Investors like to know their money will be used to build products, hire employees or add to the business in some other tangible way. Entrepreneurs often make the mistake of talking about more general plans for the funding, such as marketing. You need to be able to show the milestones that will be achieved with this round of funding.
Be sure to focus on your accomplishments so far, such as clients you have secured, distributors you have reached out to, new hires you are bringing on board. Small-business owners often spend too much time talking about the story behind their product and the difficulties they went through developing their business rather than homing in on their milestones and achievements. Investment is about certainty. You want to provide certainty.
To show investors you really understand your company, point out potential vulnerabilities and how they might affect you. If the price of gasoline or a particular material goes up, what does that mean for your business? Identifying potential risks-and your planned responses to them that will show investors how well prepared you are to run your business.
Be sure you can clearly identify the market segment you are targeting and explain how you will reach it. If you are selling coffee to young urban professionals, you should discuss your audience's growth potential, consumer preferences based on bottom-up and other research and the best marketing channels.
It is not enough to tell investors your customer service is better, you need to show what makes your business different and special. Do you keep in touch with customers through social media? Or do you offer free shipping on online orders?
Do not try to make your business look unique by telling investors you have no competitors. If you do, investors might conclude there is not really much of a market for your business. Instead, be specific about the companies you are up against.