What Investors Look For
If you decide to seek external funding for your business, it is important to know what potential investors look for in an investment opportunity. Pitching your start-up idea can be intimidating, so we have outlined the most important things that an investor wants to know before investing. Every investor is different, however, there are certain common characteristics that investors look for.
Clear Financial Information
It is important that businesses can showcase their projected financial performance to potential investors and funders in a clear and concise manner. They will generally sense check and perform some level of diligence on your financials.
Background and Industry Experience
Investors look for experienced entrepreneurs and management teams with a record of high performance and leadership in the industry or in previous businesses. Investors are likely to research your business experience and your background in that industry. Commitment and enthusiasm should be a priority for start-up business owners, so investors and stakeholders will feel confident with you and your business.
An investor may be familiar with your industry and are aware of some of your competitors. Prior to investing, they will need evidence that your business has a significant advantage that the competition cannot easily imitate. Identify key leverage points in your business model that will help convince investors that you can build a sustainable competitive advantage.
A Solid Business Plan
Having a solid business plan shows investors that you are serious about your business and given thought to how you will allocate any funding received. Your business plan should include details in relation to:
- Your intended market and include market analysis and how your product will serve this market.
- Financial projections. (Link to financial projection article).
- Sales Channels and information as to why they will be effective.
- Marketing plans and goals.
- Analysis of competitors.
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Many start-up owners have prospective business ideas but may not have the drive and wherewithal to take those ideas and create working, financially viable businesses. Showing investors that your company is ready to take off will improve your credibility. To show business readiness it is important to have your market research completed and a strong business plan. You need to show investors you have a clear plan in place.
Investors provide funding to start-ups to make money on their investments. The most important task an entrepreneur has when dealing with investors, is to show them that your business is a good investment opportunity and will potentially provide strong returns on investment.
Why Work with Gallagher Keane?
Gallagher Keane provide professional accounting, tax, and financial advice to many start-up businesses. This helps them make informed business decisions to reach their goals. Gallagher Keane provides cloud accounting services to clients, giving start-ups a modern accounting solution.