Entrepreneur Guide 101: Know what to do With Your Investment

Couple meeting with financial advisor.

Whether you are opening a corner store or starting a new technology company, the single biggest problem entrepreneurs find themselves is finding the capital or financial funding necessary to take their business to the next level. It is that necessary resource that can take a simple idea into a business. But how do you do it? Oftentimes, entrepreneurs are faced with a variety of questions when they want to make this expansion. What amount should I raise? What is my valuation? How much control or minority stake should I give up to investors? While all of these questions are important in their own right, the main question you need to focus on is how can you get investors.

For the millennial entrepreneurs, many have used various crowdfunding sites such as Kickstarter, Gofundme, or Rockethub to raise enough financial capital for their business venture to launch. Some, especially in African countries, have even sought out micro-financing firms as an option to change the course of their business. But to seek out new, excited, and willing investors, is not easy. It is difficult to get people to invest simply in an idea. That being said, the best way to get people invested in your company is by having them invest in you. At the end of the day, you need to show your investor or investors that you are confident, strategic, and knowledgeable in bringing your business to the next level.

Below, you will find four big angles you need to plan and perfect before meeting with any type of investor. While this may take some time, keep in mind that an idea can only take you so far. Show the investors why they need to invest in you so that you can turn your business dreams into a reality.

1 Perfect Your Story of Self

When talking to investors, they are not just looking for you to talk about the company or the product itself. Rather they are looking for you to pitch an overall holistic view of you and the idea behind the product. As stated earlier, investors are looking to partner with the person. When you provide a pitch, make sure you are able to discuss the history, the mission, the product, and of course the person behind the scenes. Be emotional, passionate, and most importantly, confident. Once you have provided a throughout overview of your personal and professional background, as well as your company and the product, discuss the valuation you are seeking, what you look to do with that amount, and where that investment can take your company in the future. Providing the financial aspects shows your own personal investment within the company and your overall strategy for shaping your business. That type of passion and knowledge can oftentimes be the deal breaker in attaining a new investor.

(Learn more of how to create a perfect pitch in this video here.)

2. Practice Your Pitch

We have all heard the simple phrase, “practice makes perfect.” While you may be the founder of your company, this does not excuse you from practicing your speech. This, like many things, can oftentimes be the deal breaker of whether or not you get an investor. With so much on the line, it is imperative that you do your best to internalize your speech. To provide a perfect delivery, you need to know every twist and turn your pitch takes. Make sure you know when to elongate a topic or rush a portion to make your product stand out more. Furthermore, understand when to use your emotions so that your vision and goals are reached across a variety of your audience. Last but not least, be knowledgeable about your company and your company’s finances. At times, investors will ask you a variety of question critiquing your company and your asking price. Make sure you are able address these questions informatively that can both satisfy and dissuade any type of hesitation.

2. Know The Numbers

When it comes down it, you want to make sure you are comfortable with any offers and deals. For this to happen, you need to have a strong understanding of your company’s finances. Start by understanding the economic principal’s of profit. Break down the actual numbers that you have received from a month-to-month or year-to year basis as a foundational mark for your revenue, expenses, and profit understanding. Once you are able to internalize that information, create various goals. Test out your extremes. Know what is the lowest amount of equity you can give and the highest amount you want to seek. Having the type of knowledge of the split and various offers can give you an edge during your negotiations. Remember, the best way you can look out for your company starts with the numbers. Be sure to use them as your advantage.

(Know more about the numbers here.)

3. What is the money for?

There are two things an investor wants to know. The first is when they are going to get their money back and the second is what you are planning on using the money for after they invest. During your pitch, you want to make sure you are providing various strategies to optimize your business. Many investors want to know that they are investing on a product or company that is willing to grow in the future. Show them how this investment will do just that.