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How do you attract investors?
Finding investors for a small business is a tough task, made easier if you know what you are doing and what you want.
Many people out there are looking for opportunities to invest their money in profitable businesses.
They will only plonk their money down if they are sure they will receive returns on their investment. So the onus is on you to convince them that their investments will pay dividends as your business grows.
What they need is is a vivid picture of what you intend to do with their money and that your business has growth potential.
We have already explained how a well-prepared business plan is key to convincing them to support your business.
Your business plan must serve as a road map that spells out the goals and strategies you propose to achieve growth.
It should also include information about your competitors and show your market research, which must demonstrate how effective your strategies will be in the market.
Entice potential investors even more with a written agreement that stipulates all the terms and conditions for their investment.
Your investors' agreement must also state an exit strategy and give details about divestment from the business, if necessary.
Your investors' agreement shows financiers that you are taking their investment seriously. It also serves as protection for your rights and responsibilities.
Your financial and credit records prove to potential investors that you can manage your finances properly. Your balance sheet will play a crucial role here.
If you are looking for start-up finance, proof of your savings can add weight to your application.
Accompanying your financial statements should be a demonstration that your business has grown. Investors like to see that they are investing in something sustainable.
And unless you are a master of your balance sheet and financial records, get an accountant to help you with your books before you approach investors.