Do you need investment capital for your business? Are you currently seeking investment through traditional means? When you’re out there looking for funding sources, it’s easy to get caught up in explaining how amazing your business is, but that’s not enough to get funded. There are plenty of businesses with wonderful products and services that don’t get funded. The truth of the matter is that viability isn’t the only factor investors consider.
Investors are looking for positives and negatives, and even small factors can be a deal-breaker. To make your business more attractive to investors and get funded, consider the following points.
1. Be transparent
Conscious investors want to know they’re supporting companies that align with their values. Investors care about Environmental, Social, and Governance (ESG) considerations, and transparency can go a long way to gain trust by making this information available to the public. For some, it’s not a choice. Companies in countries that have adopted ESG reporting rules are required to disclose reports concerning environmental stewardship, social responsibility, and corporate governance.
Investors use ESG data to assess the potential financial impact of environmental and climate-related risks. Although it’s not a requirement across the world (yet), many organizations comply with ESG reporting because they know it’s better for business. Just like investors, consumers also want to know they’re supporting companies that are environmentally responsible. If you fail to disclose this information, it could hurt your ability to get funded.
Even if your business isn’t required to report on how your activities impact the environment, it’s a good idea to follow suit with those who fall under this reporting requirement. Some investors will only provide capital to companies that meet strict environmental standards, so if that applies to you, make it known.
2. Have your business plan created by a professional
Getting a professionally crafted business plan will cost money, but you don’t want to take shortcuts here. A business plan serves three main purposes: to serve as a growth strategy, predict future financial requirements, and get funding.
It’s tempting to download templates from the internet and fill in the blanks and calculate the numbers, but that doesn’t mean your projections will be accurate. Creating a business plan takes more than a few calculations. You have to know your market inside and out, and have done significant research. It helps to have experience with presentation as well since some investors will go straight to the numbers to see the returns before reading anything you’ve written about your business.
Investors are used to analyzing business plans and can easily spot things that don’t seem right. Inflated returns, intentional or not, will be a red flag. Anything designed to attract investors is best handled by an expert. A good business plan can make the difference between getting funded and continually rejected.
3. Write a compelling story
You’ll meet and interact with investors in a variety of settings, from networking at conferences to last-minute casual connections and pre-arranged meetings. It’s crucial to have a compelling story to capture their attention. On the surface, this will be your elevator pitch – a few hard-hitting sentences that tell investors what you sell, how it will be successful, how much money you need, and how that funding will be used.
People are highly motivated by compelling stories, but don’t make it up – be authentic. Look for the most appealing angles of the story of how and why you created your business and use that. It helps to hire a professional writer who can craft the copy to be both persuasive and inspiring.
4. Make sure your customers are happy
Everyone thinks their business is amazing, but that doesn’t mean the world feels the same way. Where funding is concerned, how your customers feel matters. Potential investors want to see what people say about your business and they will look for social proof.
Do you know how your customers feel about your products and services? If you aren’t sure, find out. If they seem dissatisfied, investigate the situation and implement a solution. You might need to improve your products or bring customer service up a notch, but it’s worth the effort. Having social proof that your business is good is one of the fastest ways to win over investors who have multiple options.
If you fail, find the problem and keep going
Getting investment can be exhausting, but don’t give up just because it’s hard. If you get rejected, ask for feedback and use it to improve your efforts. You’ll stand a better chance at getting funded when you make impactful changes after each rejection.