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4 Keys to Attracting Investors in a Downturn

November 30, 2016

Attracting Investors is never easy. It includes having both an attractive business or idea, as well as knowing the right network with the right investors to pull the trigger on a deal. Investors are everywhere, it is all about identifying whom could be an Investor and then presenting the information to them in the right way.

 

Magnolias Angel Investing Group sees this all of the time. Many times companies just do not have the right "stuff" to attract the money that they need to get their idea going.

 

As a result we have compiles 4 main Keys to Attracting Investors in a Downturn economy, like the one we are seeing right now in Canada.

 

1. Company Systems

 

Does your business have the right systems and processes to remove risk to the Investor? Most often the answer to this question by our clients is "Yes!",  while in reality, it is No.

 

As an Investor you want to see that the business can run with the systems and procedures in place, with minimal intervention if required. Also does the company show adequate due diligence procedures and policies to reduce litigation risks and liabilities.

 

These company systems include if the business has a Quality Management System, a Health and Safety System, an Environmental System, Standard Operating Procedures and more. Every business, whether you are in retail or construction can benefit from having these core systems and procedures.

 

It will help when it comes to investment, and even increase the value of your business, if you have them.

 

2. The Target Problem

 

Know what is the problem your business solves.

 

This question almost everyone knows. Very few businesses are started or ever succeed without solving a problem or need for customers. 

 

The key here is to know and prepare an answer for investors when they ask you this question. Your answer should be so good, that the investor thinks you probably practiced it in the mirror for hours on end. If your answer / problem is something that they can relate to, it will be even more powerful.

 

3. The Target Solution

 

Know how your business addresses this problem. 

 

We cannot stress this question enough. It amazes us how many investment meetings we have been in, where a questions comes up about the companies service or product and why customers should buy it, yet the management or owners blank on the answer.

 

Understand that if a Investor agrees to a meeting they are going to want to know everything about your business, and this is not the time to hold anything back. Knowing everything about your product and why customers need it, is essential to this process.

 

4.  The Target Market

 

Market Research and knowing whom you are selling too (having a database or CRM software) is one of the biggest mistakes small business owners make.

 

There is Value, in knowing your customers and often Investors will pay for it. Having the appropriate software or CRM in place to keep track of customer data is worth it's weight in gold.

 

For example, if you have the information of every customer and client you have ever worked with, not only does it protect from employee movement and turnover in sales staff, but it also allows for market research to be performed to help access potential expansion or retention strategies.

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