When starting a business, one of the main aims is to make it profitable, and also sustainable. Entrepreneurs usually have these big ideas that need funding to ensure a business achieves its goals. While some entrepreneurs can afford to finance their vision, most will be looking for ways to fund their businesses. This article looks at some of the factors to consider when looking for investment opportunities.
a) Have a concrete plan
The first question to ask yourself when looking for investment is whether you have a solid plan. While making an investment to your small business may seem like a no brainer, the plan may backfire on you if you have not planned ahead.
When trying to decide on whether to make small investment in the business, you should consider your goals, business finances, and personal finances in order to decide how much to invest back in your businesses. Understanding these factors will help you in making sound financial decisions. Making a plan will also help you in judging whether it is the right time to grow and scale your business, and not just rushing because it seems like it's the next step to take.
b) Understand the investment options available for you
Depending on the type of business you are running, you will have different investment options available for you. For example, Private Equity (PE) investments are made by individuals or private institutions, Venture Capital (VC) are mostly used to fund start-ups, while Angel Investing investments usually provide funding for start-ups but in smaller amounts. Entrepreneurs can also consider looking for government venture capital funding programs.
c) Consider the role of your investor
When looking for an investor, it is important to know the role they intend to play in your business, the most recent investments they have made, what they expect to get back from you, and how much they want to be involved in your business.
These questions and others you may have in mind will help you in determining whether you are making the right choice for your business.
d) Consider crowdfunding sites
A popular trend that has been gaining a lot of popularity for small businesses is seeking investments through crowdfunding sites. Sites such as Indiegogo and Kickstarter provide entrepreneurs with a huge pool of potential investors and philanthropists willing to sponsor their projects. Since each is different, you should look at how they operate.
e) Apply for incubator or accelerator programs
If you are in the start-up phase of your business, then you may consider these two options. Incubator and accelerator programs provide guidance, advice, funding, and other forms of support to ensure your idea turns into a viable business. Most of these programs offer physical space for entrepreneurs to allow them work directly with their mentors.
When looking for such programs, it is important to consider their terms and conditions, since in most cases, they may want a piece of start-up.