One of the biggest challenges for entrepreneurs is raising enough capital to turn ideas, plans and passions into feasible businesses.
One of the most common ways to tackle this is through sourcing investment or funding, however, securing it can be a different story.
The bottom line is, investors are looking for certain elements in both the business and their owners that they can see will be successful and most importantly, make them money in the long run. But what are these elements and how can you give yourself the best chance of securing investment this year?
Head of Bayleaf Angel Investors, Mike McKie focuses on working with young entrepreneurs and SMEs. He knows exactly what he’s looking for as an investor and is happy to share first-hand expert advice, with his top tips on how to make your business more investable in 2020.
How do you secure an investment in 2020?
Always display honesty and reliability
Transparency is key. Investors don’t like unexpected surprises. They are investing in you and your business, so trust is absolutely vital. Ensure you are upfront regarding any negatives whatsoever. An investor can help you spin the bad into good and will respect your integrity. Investors have experience and you can use their knowledge to enhance your business strategy and improve your situation moving forward,
The fastest way to lose this important business relationship is hiding anything or embellishing the truth. Communication is what keeps investors happy. In any relationship, personal or business, being able to communicate promotes good feeling and is more productive overall.
Research shows that subconsciously, when you aren’t truthful, even if it’s dishonesty by emission people pick up on it. Don’t allow your business to be tainted. Integrity can never be overlooked so ensure you are completely open and honest at every turn.
Prove and understand your forecasts
If an investor is going to finance your business venture, they will want to generate a return. As such, you need to take the time to understand how your numbers work and how likely your forecast is to be accurate. You can’t just predict the future without any evidence to substantiate it. Ensure that growth levels are achievable, and allowances have been made to invest and reinvest back into the business growth. Familiarise yourself with financial projections and terminology to ensure your investor has confidence in your understanding.
Ensure you have a well thought out business plan too. Much like the forecast, a comprehensive and considered business plan is non-negotiable. By ensuring your business plan is as all-inclusive as possible you’ll make life as easy as possible for your potential investor. Ensure that the information that you include is, as with the forecasts, realistic and plausible.
Create a buzz
If you can excite the relevant people to talk about you and generate awareness, this will be appreciated by anyone who is looking to invest in you. Again, this is a speculate to accumulate exercise so if you can prove that there is genuine interest it builds confidence in both your abilities and the viability of your brand.
This doesn’t need to be an expensive exercise. The key is getting good value for money and there are a few routes you can take to achieve this. One example is PR. Exposure strengthens your brand and shows that you are interesting, and people want to talk about you.
Be clear about your vision
Regardless of company size, a shared vision from MD down is vital to ensure people are enthusiastic. Your investors will want to know what your long plan is and of course, they will be more likely to work with you if you have a vision. Equally, you don’t want to work with anyone who’s vision does not align with your values. If you explain your unique selling points and outline competitive advantages, you are more likely to succeed.
It has been argued that sharing a vision is one of the most important parts of creating an investment partnership so don’t neglect the impact it will have. It can be difficult to communicate what you see and get the real emotion of it across, but you can use your business plan to build upon this.
Don’t hide from the exit strategy
It’s very easy to expect an investor to see the potential you bring to the table, but what if they want to withdraw? Some kind of idea on an exit plan is beneficial. It doesn’t need to be particularly comprehensive, but adding this element simply shows that you understand the potential for this to happen. It also allows the investor to avoid feeling hemmed in by your restrictions when they are a big part of your success too.
If you’re young and find it difficult to source investment, don’t panic. Mike and his team have particular interests in helping minority owned businesses to secure funding. If you are struggling to push your exciting new idea Bayleaf Angel Investors would love to help.