M. Positioning for Investors and/or Banks
If you seek investment, remember that raising capital is a negotiation and must be beneficial for all parties. Know the value you bring to the table, but also be clear on what your investors will get in return. Everyone devoting time, money, or expertise to the business needs to benefit.
Investors take a risk. If things go badly, they get nothing in return. Even experienced investors see only a few of their investments pay off. Being smart in both your preparation and your request for funds can help potential investors and lenders see you as a solid bet.
When talking with investors, consider:
- How can you prove that your understanding of your customer and their problems is right?
- How does your solution make sense for the customer?
- How will your solution make money? Will it provide multiple ways to make money?
- How many people are interested in buying what you sell? How will that number grow? How do you know?
- Why is your team the right one to run this business? What sort of expertise do you have? Do any of your teammates bring particular credibility to what you are doing?
- What sort of connection do you have in your industry to help you succeed?
- How far along are you in the customer feedback, product development, and pre-sale process?
- What have you personally invested in the business?
When going for a loan, consider:
- What personal or business assets do you have that could act as assurance of repayment? A house, a car, a building, large equipment?
- What is your credit score and debt history? Can you prove you are trustworthy?
- Do you know someone who will guarantee your loan?
- Do you have a lot of experience running a business or do you have partners who provide the experience you lack?
- How soon do you expect to get sales from this loan? Have you tested your assumptions to back it up?
- Is the loan paying for something that has resale value?
- Do you have early sales or customer feedback that confirms you have something people want?