Smart Way To Investor’s Pocket

Ndzavi DerrickMany people are sitting with ideas and have no funds to implement them and some of these ideas die without seeing daylight.  They put their focus on banks and other financial institutions for funding and overlook the private investors who would have been able to finance those projects had they been approached the same way one approach the financial institutions, however most people when they approach private funders they tend to do it very casual hence most investors refuse to finance the projects.  In order for your idea to get investors’ attention you must:

Approach investors as you would approach the banks

You need to stick to all the requirements that banks need when you approach private investors.  Do not get casual just because your rich uncle is not a bank.  Have all your documents ready, your business plan with financial projections and letters of intent from your potential clients if possible and quotations from your potential suppliers.  The private funder or investor wants to do due diligence before investing, they must be satisfied that there will be return on investment.

Avoid overselling the idea

Most entrepreneurs who seek funding tend to speak good about the idea and mention the disadvantages in passing as if they are not important.  Before the investor can pick up the disadvantages, you must mention them yourself and show how you will deal with them. Do not oversell your idea in a way that will make it too good to be true.

Do not oversell yourself

Showing investors how confident you are is a good thing but while presenting your idea let the idea be the main focus than you.  Avoid talking too much about yourself and how you hate certain people and love certain people, your investor is interested in the details of the business, when coming to your character, a shrewd investor would have studied you the moment you walk through the door.   Do not present a picture of “Me, Myself and I” as that may make the investor feel that it will be one man’s show which may put risk to the investment.

Pay attention to the figures

If you have no clue of how financials reads, do not attempt to prepare them yourself, rather find someone who has accounting background to prepare them because investors tend to pay much attention on the figures as they want to see how they will get the ROI (return on investment).  A minor error on the financials can put a dent on the whole proposal.  Do not exaggerate the profit margins as people tend to be over optimistic on the profit the business will make.  You are talking to someone who has been there and done that, be realistic in your presentation.

Be known to the banks

Now that you secured funding from the investor, build a good profile with the banks for them to assist you financially when you need business recapitalization.  Build enough cash reserves and avoid defaults on debit orders and overdrafts, your investor may expect the repayment or profit and with good relationship with the banks you can borrow money anytime you need cash injection for business growth and expansion.

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