Business investors are essential when looking to expand a business. Other tools such as business loans are useful but cannot compare to the funds that can be made available through business investors. Furthermore, these funds usually don’t have to be repaid on a fixed, pressure-filled schedule. However, when investing in a business it is obvious that investors will want something in return, whether ownership equity or convertible bond, and you must be clear on the kind of arrangement you are willing to work with in advance. It is imperative, therefore, to have a clear cut plan on how to find, attract and seduce appropriate business investors.

5 Tips on how to attract business investors

  1. Keep your proposal simple and effective so that business investors can relate to it. If you’re not particularly experienced in dealing with investors, or if you’re attempting to form a partnership with people who haven’t previously invested in a business, you should aim to keep your business model as simple as possible. Does what you’re selling really appeal to your potential investors? Is it a product or service they’re familiar with or have used before? If, for example, I was to set up a gym franchise, then even if the people I would approach for money hadn’t so much as heard of the franchise, they would understand the appeal of a place to take a break and let off some steam, or to simply meet up with a friend and have fun whilst keeping fit–it’s not a hard sell.
  2. Ask yourself whether or not business investors can “buy” you as the representative of your business. If I was going to be selling this image of health and well-being, then, as a young man, my youth and energy would make me a perfect fit for the role. It is important for your personality to fit in with the brand you are trying to sell. If I was to also look fit and health conscious in this scenario, my investors could take a look at me and think, “yeah, you could be the expert on health and exercise. Absolutely.”
  3. Use a proven business model to make your business investors feel more comfortable. As is the case in all professions, there are some disadvantages to operating a franchise. But a golden advantage is that you’re using an already explored and tested template that covers all aspects from build-out costs to profit projections, grounded not on theoretical ideas, but on actual businesses putting this precise model into practice. This will ease investors minds and make them feel much more relaxed.
  4. Prepare a thorough business plan for business investors well in advance. Even with the franchise business model, you will have to do a lot of research on your community to determine the viability of operating your business there, and you will also have to develop a resounding local marketing strategy, in addition to a management model with policies and procedures. Business investors need to see that you have been meticulous down to the last detail about your business, and that your future goals are realistic and convey a picture of financial stability. Don’t forget to include a presentation of your finances in your business plan, with a clear reference to the amount of money you will need and how you intend to repay it.
  5. Keep all financial projections conservative when trying to impress business investors. Don’t be too eager to under-promise and over-deliver. It’s common for people concern themselves with achieving a quick win, convincing investors to pass along the cash because they will make a fortune in return. It’s better to create a healthy, long-term relationship with your investors and keep their expectations realistic.