MightyRecruiterThe owners of small businesses don’t have the connections and resources enjoyed by larger and better established businesses. If this scenario sounds familiar and you’d like access to capital to help get your ideas off of the ground, learn what the experts have to say about successful small business financing.
Know What You Want
Surgeons shouldn’t attempt a complex procedure before receiving proper and thorough training, and you shouldn’t attempt approaching investors before receiving proper knowledge on the type of investment you desire. One of the first things you should know is the difference between venture capitalists and angel investors. Venture capitalists specialize in larger investments while angel capitalists make more modest investments with small business owners like yourself.
On a related note, you should also think about the type of business you’d like to have before you seek out small business financing. Are you looking to grow your small business into a larger business If so, you’ll want to take some time to think about what you’ll be giving up and what you’ll be gaining. Rather than focusing mostly on your product or service, you’re likely to have to shift that focus to hiring the right people and managing your employees as your business starts to grow. To get a better idea of what it means to be the owner of a larger business, reach out to such business owners and see what their experiences have been like.
Manage Your Time Wisely
Once you’ve managed to capture the interest of individuals looking to give you assistance with small business financing, you’ll want to prescreen them. This is a situation in which you’ll most certainly want to look a gift horse in the mouth, ears, nose and everywhere else e before accepting it. Specifically, make sure the investor actually has the capital you need, or at least access to it. You should also determine whether that individual has the ability to make decisions and is familiar with making investments with your type and size of business. Doing your due diligence can help you to avoid an abundance of frustration and might even keep you from being the victim of a scam.
Show Your Business Is Profitable
To further increase your chances of receiving small business financing from investors, you might first have to take on loans, borrow money from friends and find other ways to funnel capital into your small business. The reason for this is that investors have become risk adverse, and they’d rather not pour their money into companies that don’t yet have a proven track record for growth and traction. While this might be frustrating to some small business owners, it’s actually a good opportunity to test out a variety of different tactics and strategies until you find one that works best for you and your specific business. You can use that knowledge not only to entice investors, but also to fortify your business and shape your business model.
Determine Your Milestones
Something else to do while creating a strategy for small business financing is to create milestones before you seek out investors. Determine what you want to do with your business, how you’d like to do it and how much it’s likely to cost. Now give yourself a deadline for all of this. What’s great about this strategy is that it ensures you ask only for the amount you need when you need it, which potential investors are sure to appreciate. Once you’ve reached your milestones, you can create more before you seek out additional investing.
Learn More About Your Metrics
While it’s all well and good to focus on your past accomplishments and perfect your business’s origin story, you’ve got to make sure you bring numbers and data to your investors. Even though these people want to help you, they’re likely to want to see you helping yourself as well. What this means is that you want to show investors the overall cost of acquisition per customer, the repeat purchase rate of your customers and the lifetime value of your customers. It’s these metrics that will truly show your investors what they’ll be investing in. While your business’s past performance can most certainly be a powerful indicator of future performance, investors know all too well how quickly a successful business can start circling the drain.
For even more information on the finer points of small business financing and ways to build a better business, be sure to check out more of the expert tools and articles found here on Mighty Recruiter.