Ways To Finding Investors For Your Startup – Beginners Guide
Starting a new business is an exciting time for many business owners. However, according to research, it has showed that too often new business ventures are unable to succeed due to lack of capital in the first two years of operations. Generally, the first two years is the most stressful years to a business owner due to monetary strains.
Rarely does a new business owner have the personal assets of funding sources to start, maintain, operate and grow the business when they are starting up a new company. Because of this reason, many people find it critical for you to find investors for the capital required to keep the business operating the first few years. Unfortunately, only few people know how to get those investors.
Below are tips which could help you not only get investors for your business but also how to encourage those who are interested to invest as well.
Developing A Business Plan
The first and most important step is coming up with a business plan. This is the first method of getting an investor. As you know, a good business plan should clearly explain what your business is all about, the targeted market, projected sales for at least the first five years and any industry report that you think it is important. Moreover, it should indicate how your idea is going to meet the unfulfilled needs. You should know how to write a business plan and the techniques of doing so.
Developing a business plan does help in calculating everything needed before looking for the start-up capital. As you are doing this, ensure that you have calculated other factors such as risk and miscellaneous. Too often, people do calculate the cost of rent, production cost, cost of raw material and even the cost of utilities; but, they do forget about personal transportation cost, cleaning products and other related costs.
The Co-Founder Stage
As you are transforming your ideas into a physical prototype, it is advisable to have another person skilled at what you are doing to invest. In most cases, the business share will be divided depending to their contribution and the agreed terms. In most cases, it is a 50/50 company division. In other cases, it could be a 60/40 division.
If you are looking for a co-founder, it is advisable to look for an experienced person in that field/industry. The co-founder will also invest in the business not only physically, but also money/capital wise. Ensure there is a legal document to show the duties of each person and the percentage of business ownership.
The Friends And Family Stage
Before you let others invest in your business, talk to family and friends and those people close to home. At the same time, any cash you take from your family; ensure there is a legal document to ensure that you have kept the investment as a business relationship.
The Angel Investor
As soon as you realize that your initial capital is starting to run low, it is now time to look for an angel investor. According to HALO report, an angle investor should be worth $2.5 million. Therefore, an angel investor should invest a minimum of $2.5 million in your business.