What Are Business Lenders and Investors Looking For?
written by: W. A. Swan•edited by: Jean Scheid•updated: 8/19/2010
When trying to receive business funding, sometimes organization is more important than ideas. What are some ways you can prepare so that you will do your best impressing business lenders and investors?
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When a business owner is trying to find business funding for their operation, the organization of the business and its operations are often more critical to business lenders and investors than the original idea or concept. To really impress potential funding sources, business owners must consider five areas where details and planning will show a potential for profitability to their funding sources. Below is a detailed review of each of these five areas to assist you in impressing business lenders and investors.
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5 Ways to Impress Business Lenders & Investors
1. Have a Detailed Business Plan
One of the first ways to show you are prepared for business is to have a business plan. This is one of the first signs of a serious minded person that a business lender or investor looks for when offering business funding. The business plan shows how thought out the entire concept is and how it will be carried out. Without this document, business lenders and investors will consider their time wasted.
2. Have a Detailed Marketing Plan
Another way to prepare yourself to impress a business lender or investor is to have a documented marketing plan when you seek out business funding. Having a concrete marketing strategy to show these people will provide them with a view of where their money is going and how you will increase their return in your venture. The only reason someone is offering you business funding is to make money from their investment.
3. Have an Accounting System in Place
A good way of impressing a business lender or investor is to show you understand about “bean counting" and its importance. Providers of business funding will want to know you have a good method of accounting for where each penny goes, the reason for it going there, and what the potential return for that placement will be to both you and them. Having an accounting system in place will also show that you have a method to catch shortfalls, oversights, and potential problems before they become too big to handle.
4. Have the Necessary Experience or Personnel
One way of impressing business lenders and investors is to acknowledge that certain experience can be found in other people; and having the insight to have those people and their experience working with you. This is one of the main selling points of a start-up corporation looking to issue stocks as part of its business funding plan. Lenders and investors will look at the experience of the people who make up the board of directors to see if there is the proper amount of knowledge and experience for the business to succeed. This does depend on what the investor considers a proper amount, however, if you show that your team has both qualifications, and years of field work behind them, most often this is enough.
5. Have Suppliers, Vendors, or Support Lined Up
Another way of getting business funding is by impressing upon business lenders and investors the fact that you have the support lined up to keep your business functioning. By showing that you have the support, suppliers and vendors ready to help maintain your customers satisfaction you will show that you are prepared to provide income and financial returns to the investors. By having a working supply line from day one, you can show that you are fully committed to the business and to keeping it running; to further impress business lenders you may want to have a brief outline of what your backup suppliers or support will be should your initial support system fail at any point in the line. Redundancy to a second or third level shows preparedness which will help ensure income and a return on investment.