Web www.albaspectrum.com

Popular articles

Once you have written a good business plan, and consulted with your accountant, you should then take the time to develop a coordinated proposal for potential investors. This proposal will involve such material as demographics, progress reports, audio/visual aid, and product samples.

Ask yourself "why would investors be interested in my business", "what do they have to gain", and "how can I convince them". Remember, your investors aren’t looking to see the tactical part of your business. They’re much more likely to be interested in your overall strategic plans. They want to know how you plan on maximizing profits, and minimizing costs.

For example, say you’re planning on selling wristwatches that have built in MP3 players. Your objective here would be to present your investors with the market cap and growth potential of compact/portable MP3 players. Not to tell them how attractive this product will be and that people will buy it because it’s new and multifunctional. This is a big mistake in many business proposals. Your investors want verifiable proof and sometimes you will need to go to great lengths to give it to them.

Most importantly you will need to show investors their return on investment. This won’t be an easy task, because different kinds of investors are looking for different kinds of returns. If we’re considering a partnership investment, for example, then you would need to offer a return greater than that most likely to be achieved by your investor, had he or she put their money in other possible endeavors. Say you approach an investor with a capital investment of $10,000. Let’s consider where this sum of money could be invested other than your business. The most likely investment would be the bank. Banks in the U.S. usually offer interest rates of anywhere from 2% to 4% (that’s up to $400 per year). If your investor isn’t going to get more than that from you then why would they consider investing in your business?

Another possibility for investment today is the stock market. The stock market is full of potential, day in and day out, with some businesses even offering stock trading online. However, the stock market is a risky investment and most investors with small capital tend to shy away from this type of investment.

Consider risk! Sometimes investors are just too greedy or too cautious. If the return on investment doesn’t seem to appeal to their interests, there’s another important factor to consider. You could convince your potential investors by presenting them with the low risk factors of your business to compensate for lower return. Every investor likes to see low risk. Emphasize on hidden potential and untapped markets. Reassure them with collateral. Explain whether this will be a free trade market or a monopoly. Show them statistical quantitative/qualitative research pointing to future growth. You will need to make sure you don’t overestimate your figures, though. This will compromise your investors’ trust in the future.

No matter who your investors are, you should always, approach them bearing fruit. This means that ideas are not enough! A part of building confidence and trust with your investors is showing them that you--yourself are already invested in your business and that there are signs of progress.