10 things to clarify before approaching investors | SupportBiz

Managing Growth

10 things to clarify before approaching investors

 
A business needs funds at different stages of its life, for its next-level growth. The successful growth of a business, largely, depends upon its ability to garner sufficient amount of funds from investors.

Hence, pitching to investors is one of the most important tasks of an entrepreneur, almost a life-and-death matter.

SupportBiz lists 10 things that an entrepreneur should consider, to make just that perfect pitch to potential investors.

1.     Target market

You need to be clear about what your target market is – what section of the society do you think you can market your products/services to. Investors will be impressed if you have up-to-date information about this market segment – their average age, disposable income, average education level, buying behaviour, et al.

You should also be clear about the methods that you will be using to reach out to your target market.

2.     Competition

If you tell investors that there is no competition for your products/services, they might end up understanding that there is no market for your business. Instead, present to them an accurate and fair picture of your competitors.

Give potential investors a clear idea of the businesses you are up against. This will indicate to them that you not only understand your competition, but are also confident enough to face any challenges that might arise due to it in future.

3.     Competitive advantage

It is a good idea to tell investors about your specific competitive advantages. Tell them exactly how your business and your products/services differ from your competitors, and how you plan to stand out in the market.

Do not make unnecessarily tall claims, or try to hide the truth behind flowery language and platitudes. It is not sufficient to tell potential investors that your products/services are better than those of your competitors; you should be able to tell them exactly why they are better.

4.     Vulnerability

You will need to tell potential investors the factors to which your business is most sensitive to. Tell them about the various aspects which will influence your business, either positively or negatively, to what extent they can be controlled, and how you plan to deal with them.

A clear understanding of the sensitivity of a business and the confidence to handle it will surely impress potential investors.

5.     Tangible results

You should be able to tell potential investors exactly what you will be using the money for.

Instead of giving them vague plans of investment, give them the specific milestones you plan to achieve by using the funds.

6.     Accomplishments

Potential investors want to see that you not only have a business dream that you are passionate about, but also that you are capable enough of converting that dream into reality. Hence, you should tell them about the achievements that you have managed to secure till date.

In other words, you should be able to tell investors about the concrete steps you have taken towards turning your dream of starting your own business into reality. For instance, the number of interviews conducted and the staff you plan to hire, market research done, or the number of potential clients approached.

7.     Past successes

Investors will be impressed if you tell them about business successes that you have accomplished in the past. For instance, major clients that you have brought to a previous employer, a successful marketing campaign or big project that you have handled in the past.

Instead of giving potential investors the names of your past employers, indicate to them the major concrete accomplishments of yours in the past. Highlight your personal contribution to the businesses of your past employers.

8.     Market for products/services

Just telling potential investors that a market exists for the products/services you produce is not sufficient. You should be able to prove the same, tangibly.

Market research will give you the hard facts and figures that you will need to convince potential investors about this aspect. You could also consider using real-life examples of firms similar to yours that have gone on to achieve success.

9.     Sales, distribution and marketing model

You will need to give potential investors a clear idea about the sales, distribution and marketing model that you will be using.

How will you acquire new customers? What would be the cost involved in acquiring new clients? How will you fix the price of your products/services? What are the distribution channels that you plan to use for your products/services? How do you plan to market your products/services? These are some questions you should have definite answers for.

10.  Team

Most investors want to see who is on your team, before they decide whether to provide funds to you or not. Ensure that you point out your key employees to them, in this case.

If you are managing your start-up on your own and have not yet recruited a team, clarify the same to potential investors and tell them about your plans to hire specific talents soon.