Many entrepreneurs have dynamic new businesses all but ready to launch yet lack capital to turn their dreams into reality. If you find yourself in this position while preparing your startup, one tried and proven strategy is to pitch your project to investors.
Here are some dos and don’ts to keep in mind when adopting this method of funding.
Do: Create a Comprehensive Business Plan
One of the first things investors ask to look at is your business plan. This should include, first of all, an executive summary that synopsizes your entire plan. It should also have a description of your business as well as analyses of the industry and markets in which you will operate. Outline your organization and management structure, and offer financial projections backed up by as much data as you have available. An appendix should include resumes, registrations, partnership agreements, industry studies, and other documentation.
Don’t: Be Without a Proof-of-Concept
A proof-of-concept is something tangible to demonstrate to investors that you have gone beyond the planning stage of your business. This might be a web presence that shows impressive site traffic or a working product prototype.
Do: Conduct Sufficient Research
Before you approach investors, conduct research to be sure they are legitimate and have sufficient funds to help finance your business. You can do this by studying their websites and finding out who their existing clients are. Many investors require a share in your business as part of the investment package, which is important to know in advance so you can decide whether you want to pay this price.
Don’t: Forget to Practice Your Presentation
You generally have just one chance to impress investors, so practice your pitch until it’s fine-tuned to perfection. Work on the narrative elements and the timing until it is engaging all the way through.
Do: Be Specific About the Amount You Need
Make sure you do your homework before you pitch to investors. Crunch the numbers, and be prepared with a specific financial request. Give details about how you plan to spend the money, and outline your long-term financial strategies.
For more advice on pitching investors, look to IRC Commercial Lending.