Starting a business is an overwhelming experience. Most people consider starting their own business at some point in their life, be it a small scale business or a multi-million dollar business. No matter what the idea is, there’s one common thing required by all of them: Capital. Startups need capital to start or grow their business.
There are various financing techniques used by the entrepreneurs, like bootstrapping, crowd-funding, loan etc. But for most of the entrepreneurs, the best way to finance their business is by finding an investor. Finding a perfect investor is a tedious task. So, here are a few things you should keep in mind while pitching a potential investor.
Build a Strong Business Model
Vedang Patel, Co-founder, Souled Store, said, “The first thing to remember is that most businesses don’t require a huge investment right off the bat. It’s more important to prove that you have a scalable, repeatable, and profitable business model than it is to raise a large amount of money. So initially, that should be one’s focus.”
“Building a business model that’s profitable has a dual advantage— first, potential investors see a solid business model; and second, you know how to run and grow your business even if investors don’t agree to fund you,” added, Patel.
Know Your Business Figures
“When it comes to pitching to an investor, one must always keep this thing in mind: Know your numbers in and out. You have to know all the data around your company; from revenue to costs to product varieties. There is no valid excuse for not knowing every little detail about your company. However, if you are to stumble, admit your mistake instead of trying to fake numbers,” said, Patel.
Show Your Business Potential
Investing is a risky business. Before an investor is willing to jump out of a plane with you at 15,000 feet, he or she will want to know whether you have bought parachute with you and how it works.
No investor will pull out their cheque book and lend out their hard-earned money if you don’t demonstrate your business potential.
“Most investors want to see a return on their investment over a period of time. So you need to show them your vision of the company; how big it can be and how much potential your company has. An investor will only agree to fund you if they can see the true potential,” stated, Patel.
Be specific the usage of Investment
Last but not least, while pitching an investor, always be specific about where the capital investment provided by them will be used. Whether it will be used in infrastructure? For the salary of the employees? For research and development? Or to buy the location etc. Not only this will demonstrate that you’ve got a business sense, but will also help your investor in getting the insight of where exactly his/her money will be used and will also make them feel the difference they are making.
