One major necessity that any start-up business needs is capital. Most aspiring entrepreneurs have great ideas but no funds to actualize their dream business. However, if you are serious about your business, there is plenty of hope. There are investors all around that are more than willing to put money into your business, if you play your cards right.
The first choice for some people is to go to family members or friends to assist them with a loan. This is a good option because, if they agree, you probably will not have to payback with interest. Nevertheless, this avenue might not be available for some of us, so our focus today will be on investors without family ties.
What types of Investors are Available in Nigeria?
We have 3 basic kinds of investors.
Angel Investors: There are many groups, or individuals, with high net worth who are willing to help upcoming entrepreneurs. They are known as angel investors, and this is a good place to start.
Equity Investors:These are wealthy individuals that invest in your business as co-owners. You will have to negotiate in detail with them to agree on what the percentages of ownership are. The only drawback to this is that your business decisions down the road may become heavily influenced by the investor, and you don’t have full control.
Venture Capitalists:These are organizations which invest in businesses that have already started and show massive potential for success, but need financial assistance to get to the next level. They usually don’t like small start-ups because they consider them risky and unpredictable.
How Exactly do you Win the Heart of an Investor?
First of all, investors are business men. They invest to gain profit so you must understand this. Why should they put their valuable money into your enterprise? What can your business produce in short and long term? What are the risks involved, and the probability of success? These are some of the things you must consider, to have any hope to secure an investment. That being said let us look at the details of what you need to win an investor for your business.
A Powerful Business Plan
A business plan is something you absolutely need. This is a cornerstone that the potential investor can be persuaded by. It is a complete summary of the details of the business, put down on paper. You don’t need a professional to write the plan for you, just do all your research, know the market thoroughly, and type up the important details. A business plan must include:
Business Name: The official name of the business. Let it be strong, easy to remember, and relevant to what your business is about. Use a tagline under the name of the business if necessary. Here is a sample;
NEOPLANET COMPUTERS ...fulfilling all your ICT needs
Objective: Your reason for writing this plan. Just to let the investor know what he is holding in his hand.
Business Description: A summary of what your business is all about.
Market Strategy: You must do a feasibility study, research the industry, understand the competitors, is the market booming with customers in demand? Etc.
Your Team: Your potential investor will want to know who else (if any) is going to be involved. Depending on the nature and size of the business at start-up, you may need someone for logistics/transportation, promotions/advertising, store attendant, etc. This is important for the investor to know.
Financial Breakdown: This is the money that is needed in all the specific areas to get the plan off the ground and the business up-and-running.
Other Miscellaneous Factors
Aside from the documented business plan, there are other things to keep in mind that are just as important. For example, there is something called a Unique Selling Point. This is basically what your product or service has which other competitors don’t.
Your chance of winning the investor is increased if he sees an advantage in your idea over the current state of the market. You can provide the same service but in a different way that gives you an edge, or observe a need in society and offer a whole new service or product to meet that need.
Your overall business idea and strategy should be an “eye-opener” and this will skyrocket your chances.
In addition, before you go to the potential investor, you should first take time to think and prepare for any questions they may have. Have ALL areas covered and leave no stones unturned. Doing all your research and homework is crucial. This will even boost your own confidence and positive expectation.
Conclusion
In the present economic state of the nation and the world at large, not everyone is in a hurry to invest money in an unknown, uncertain start-up business. It is therefore up to YOU the aspiring entrepreneur, to get as much information as necessary to guarantee success in landing an investor. A solid business plan combined with the inner-drive to succeed will make all the difference.