How to talk to potential investors

Posted by David J. SteeleFeb 03, 20170 Comments

The idea comes first, but forming a business is much more than just the product or service. There are business structures, employee and client contracts, insurance, location, branding and so much more. Before it gets off the ground, one of the most important things you'll do for your business is raise funding.

Some common methods of funding a business include:

  • Self-financing
  • Commercial loans
  • Seeking investors

Before you sell to customers, you'll be selling to potential financers. There are different strategies for different investors and industries. While it's always important to tailor your presentation to your audience, there are general tactics you can employ to help your message hit home.

In a recent article for Accounting Today, CEO Karla Friede discusses unique female entrepreneurs. While a few of her observations are gender specific, much of her advice can be applied to anyone in need of financial backers for your company.

Focus on your market

If you have to explain or educate potential investors, you are already facing an uphill pitch. It's not impossible to win someone over, but starting with people who know your market, your region and your community are more likely to truly understand your vision and needs.

Focus on expertise

Even if opening your business is your first time doing something, there is a reason you chose this route. Express confidence and authority on the subject. Admit to weaknesses, she says, but embrace and emphasize your strengths and why you are the best person for your plan.

Focus on results

The purpose of any business is to earn income, not just to provide a service or new resource to the community. Show investors how and why it will work instead of getting caught up in information about planning or infrastructure.

Creating a connection between the idea on paper and the product in real life is essential. Bridging the gap from concept to earning money is the only way to get an investor to commit their own resources to your project.

When securing financing and building your business from the ground up, it's essential to have precise legal agreements to protect your interests and help grow your company — which includes agreements with any investors. By carefully drafting contracts, you will protect their money while making sure that you maintain control of your company's development.