It is almost impossible to get a loan from a bank to open your own business, and if there is a chance, its cost is high enough for a beginning entrepreneur. But this is not a reason to abandon the business project, because everyone has a real opportunity to attract investment in the business. Many businessmen do not have enough money to implement their business plan, and it is for them that the main question arises about how to attract investors.
Who is an investor?
Before you start searching for who will invest in the business, you need to clearly understand who the investor is and on what terms there will be mutually beneficial cooperation. So, an investor is an individual or legal entity financing a business project, which will increase its investments in the future. Thus, the investor either becomes a shareholder of the enterprise, or receives profit from it until the moment when its capital does not return to it with interest.
But you need to consider that attracting investment in a private business is not as easy as it seems, because you will need to finally convince the investor that the project is really profitable. In a word, the goal of the investor is to increase your capital.
Why is it needed
Today there are few who wish to invest in a new business, so at the initial stage it is quite difficult to attract a third-party partner to your project. For an entrepreneur, this is a great responsibility, it is more expedient to start a new business, relying solely on their capabilities, including material ones. Although it is possible to start activities with the help of investors, but it is very difficult to do, especially for a beginner.
In a finished project that works and makes a profit, you can attract an investor in order to develop the enterprise and increase profit. But here it is very important to prove that this cooperation is primarily beneficial not to the entrepreneur himself, but to the one who needs to invest his money in the growth and development of the company.
If nevertheless the question arises of how to attract investment in business at the initial stage, then it is worth looking for them among private investors. Such are commonly called "business angels", they are not so demanding and are ready to consider promising business plans and, accordingly, invest their money in them.
So, from here we can conclude that the search for an investor is a rather serious and responsible step. It is necessary to clearly understand with whom and on what conditions it is beneficial for an entrepreneur to cooperate. To do this, first of all, you need to carefully study the requirements of investors and, of course, calculate your own capabilities.
Further, it is advisable to consider the most basic issues that will interest an aspiring entrepreneur.
What is an ideal investor
Here, of course, it is impossible to precisely answer this question, but it can be assumed what a person who is ready to invest in private business should look like. Below are some criteria:
- An investor should be primarily an experienced businessman who has already achieved success and is ready to invest his money in other projects.
- Ready to collaborate with a newcomer and participate in the project from the very beginning.
- Able to allocate real money for the long term, because any business is not profitable from the first days of its existence.
- Claims the amount of profit not more than 40% monthly.
Another important point is where to look for it. First you need to attend specialized events, meetings and conferences. You can search for an investor through organizations and companies that cooperate with him and receive start-up capital from him for the organization of the enterprise.
How to attract investor attention
It is very important not only to find the ideal investor in all criteria who will invest in the business, but also to win his attention and trust so that he has an interest in investing his money in a new or existing project.
So, a few tips for the entrepreneur:
- First of all, the entrepreneur himself must be sure of the success of his enterprise and only then convince someone else of this.
- The second task is to identify the target audience, that is, those for whom the product or service will be designed.
- Identify several channels for marketing products, and, in addition to the main options, alternative ones must be present. This will provide additional guarantees and minimize risks.
- Calculate who will bring the main profit to the enterprise, what will be the profit from the company's work, for how long it will pay off and what prospects await it in the future.
- Assess competitiveness, that is, find out the strengths and weaknesses of similar companies and how the new organization will be able to surpass competitors.
- Draw up a financial plan, correctly distribute the budget of the enterprise.
- Negotiate terms of cooperation with the investor in advance.
Even if you need small investments in a small business, you still need to make a lot of effort, and the action plan remains the same. But it’s worth considering if the cost of the project is not in the millions, whether it is worth attracting someone, perhaps it’s better to do it yourself.
Profitable investment industries today
Those who will invest in business are primarily interested in the industry, how much it is in demand and promising. Two types of enterprises can be considered beneficial, the first ones are those that pay off in a short time, the second ones will bring a high and stable income for a long time. And the best project is one that combines both options.
As for the industry, today we can distinguish several:
- medicine and pharmacology;
- advertising and marketing;
- Internet business;
- tourism and hotel business.
Conclusion
So, we can say for sure that before attracting an investor, you need to think it over several times. The businessman must have a clear business plan in the first place and, most importantly, he must make sure of the profitability of the enterprise. Perhaps it makes sense to organize an enterprise on its own, and then to attract investments in business development, but only after it will bring good profit.
