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Finding investors for your business

Friday, June 20th, 2014
Issue 25, Volume 18.

INLAND EMPIRE ‚Äď Starting a business and being your own boss is a dream for many working men and women. Whether you have a great idea for a startup business or want to branch out on your own in your current line of work, starting a business from scratch can be a risky, yet rewarding, undertaking.

One of the biggest concerns for many startup businesses is finding the money to get the business off the ground. Finding investors for a business idea often involves patience, resolve and a strong belief in your idea. Few startups can survive without some investment capital from outside sources, and the following are a few tips to help todayís entrepreneurs find financial backing for their ideas.

* Know what you need. Once youíve explained your idea, a potential investor, whether itís a venture capitalist, a trusted friend or even a family member, will want to know exactly how much money you need. The more money you need, the more people youíre likely to have to approach. If the amount of capital you need is relatively small, then you can seek the help of friends and family members. This might prove especially rewarding should your business eventually succeed, as you will have raised investment capital from the people you trust and rewarded that trust with a healthy return on their investments.

Keeping things in the family definitely has its benefits, but it can also cause problems, especially if the amount of capital you need to raise is substantial. In such instances, seeking the help of a venture capitalist might be your best bet. Venture capitalists not only invest in ideas for a living, but also if you work with a venture capitalist, your relationships with family and friends wonít grow strained if your idea or plan falters and the returns on investment are less than expected.

* Invest in yourself, but donít overdo it. Letting potential investors know youíve invested your own money in the project can help, but you donít want to overdo it.

Potential investors might hesitate to invest with someone who sank their entire savings into an idea. Such hesitation occurs Advertisement
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because investors donít want decisions affecting the company to be made by someone who is concerned about losing their entire nest egg. Such decisions are not always rational, and they can affect how you approach the business. So while itís good to invest in yourself and your idea, donít overdo it to the point where potential investors might see your business as a red flag instead of a worthwhile investment.

* Develop a detailed plan. Potential investors will want to see a detailed business plan that includes how the business will be run and how their money, should they ultimately choose to invest, will be used. Include a forecast of expenses, which includes materials needed as well as what you expect to pay in rent for office and manufacturing space. This plan should also include an earnings projection, which can point to when an investor can reasonably expect to start seeing some return on his or her investment. If you have no experience in developing a business plan, then you might want to consult a business advisor. This will cost you money, but it might make the difference between finding solid investors or sitting on your idea.

* Be enthusiastic about the future. Enthusiasm is important when seeking investors. Potential investors already have money, and they wonít want to invest in an idea with a goal of breaking even. Explain to potential investors that you have a long-term vision for your business, one that isnít just for survival but, ideally, expansion. You donít want to go overboard here, as you donít want to make it appear as though youíre putting the cart before the horse. But you donít want to project a lack of confidence in your ideas or a lack of vision for how you want your business to grow, either. Enthusiasm about the future can pique a potential investorís interest, whereas an investment opportunity that doesnít figure to yield much of a return will turn investors off.

Building a business is no small feat, and entrepreneurs should work as hard at convincing potential investors to invest as they did at developing their initial




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