Having a great new idea is not all you need to be Investor Ready. You need a lot more than that, and you need them in the right times and quantities. Let’s explore what it means to be Investor Ready.
It does start off with a good idea, but you also need Proof Of Concept. That just means that you need some kind of proof that lots of other people (Customers or at least potential customers) agree with you. The way you convince an Investor that you have a great idea is to point to real sales or to comprehensive Market Research that establishes that there is a market for what you’re talking about.
We’ve covered Market Research in this blog already, so we won’t spend a lot of time on it now. It doesn’t have to be expensive to be comprehensive, all it needs is some knowledge and a little effort.
The next thing you need is a Marketing Plan. How are you going to sell your product or service? The investor needs to know this because this is where they get the return for lending you the money to get started. If you can’t sell your idea then they can’t get a return either!
You also might need a Production Plan if you are offering a product. How can you make sure you have enough to sell? If you offer a service – how can you guarantee that you will be able to deliver when and where required?
You will need to demonstrate that you can or at least will control your finances. What income will the business have over what time frame, and what expenses will it incur? Does the income arrive in time to cover the expenses?
Do you need any assistance? Can you demonstrate that you have or that you can build the right team? Having the right people in place is vital to building a long term, solid, successful business.
You can download a Business Plan that will provide sections that will allow you to document all this and more. How you will handle competitors, your strengths, your weaknesses and how you will address them. What no Business Plan Template gives you is the next two items.
The first thing you need to make sure you have enough of is the excitement you feel about your idea. If you can’t make the potential investor excited about your idea then they never feel that they want to give you the requested funding.
The second thing you need is to demonstrate certainty. What you want is that they believe, with certainty, that your business is a sure-fired way to make money. That gives them the confidence to follow up the excitement with the actual money!
That doesn’t mean that your business plan should be a sales pitch from go to whoa, and in fact if it is too much of an overt sales pitch it can turn people off as much as anything. It just needs to convey the real feelings that you have, the real confidence that you have, to introduce them to the people you know, and for them to understand the idea as well as you do.
Until someone invents a real Vulcan Mind Meld from Star Trek the best we have for conveying your idea is a good Business Plan! Put one of those together and you’re on the way to being Investor Ready.
Do you have experience finding funding for a start up business and would you like to share your knowledge? Send us some comments by using the login tag at the top left of this window.
Most people avoid doing market research. For some reason they would rather start the intended business without sufficient information, then try to fix it as time goes by. That just takes time and effort away from actually running the business, and is something like changing the wheel of a car as it is being driven along.
Market research can be a simple, inexpensive exercise that provides specific information that results in a business that is best placed to make a profit from Day 1. What follows is a description of what to do and how to do it, and a template for you to use.
Begin by compiling a list of around 50 people who you might ask for an opinion, then from that list identify around 20 whose opinion you value more, then from that list around a half dozen whose opinion you really value and who you feel are predisposed to assist you.
Next, develop your story. This story is the tale of the business that you are thinking of starting, and that you would appreciate if they would read your proposal and give you some feedback on it.
Tell them why you think it is a good idea to start the business, what unsolved problem you identified and how you intend to solve it.
Ask them not to mention the idea, since you may not continue if you get negative feedback, and then ask specific questions designed to get at the information you really want.
Also ask them if you can add their comments and then send it back to them for further comment.
Now that you have composed your letter, send it to the group of around a half dozen. Wait until you have their feedback, then make whatever changes you think are necessary – either in the business model or in the market research letter itself, or both – and then send that out to the group of 20.
Repeat the exercise, making whatever changes you believe are required, and then send it out to the full group you identified.
When you have all that feedback collated and understood you will be able to make a reasoned decision about going into that business.
You will know if other people share your opinion that there is a requirement for that new business, you will know what they believe is important, and you will know what to say when you start to market the business. That’s a far better position than just starting the business and hoping that it is in the right place, with the right product at the right price.
What follows is a template that you can use, and an example letter created for an Accountant who wanted to offer their fellow Accountants some sub-contract services.
If you have any questions please just go to the Member’s Forum and let us know what is on your mind. Remember to search for your question first, we may have already answered it, and that will get you back up and running almost immediately.