Entrepreneur Investor Network » investment

Do’s and Don’ts of Investment

admin — Sun, 27 Sep 2009 08:30:35 +0000

Private investors

need to know what to look for in an investment, and also what should definitely be avoided. Here’s a quick run through of the dos and don’ts of investment.

DO look for an investment that has potential for growth. Without growth you can’t hope for any form of profit, and as such your return is out of the window. It’s your money that you’re investing, so make sure it’s going to be worth it.

DO find a business partner who has a clear understanding of finances and the business market as a whole. Of course, as a private investor you’ll already be well versed in the area, but you’re not there to babysit your business partner. While you can offer advice and guidance, they need to have an idea of what it’s all about too, especially as they’ll be spending your money. You need to trust that they’ll be spending it wisely.

DO look for a business plan that shows everything you need to see. If it’s not spelled out for you, or if it’s strategically hidden, it could be that the investment isn’t going to offer everything that you need it to. As a private investor, you’ll have the pick of the best plans available, so wait until you’ve got one that ticks all the boxes.

DON’T be put off by a business idea that seems risky. Often, it can be the riskiest ideas that turn out to be the most profitable, as they’re usually the most unique and bring something new to the market. It could even be the next big craze to hit the streets, so make sure that you’re the private investor who gets in first.

DON’T accept an investment where you’re not getting the share that you want or you can’t see the exit strategy that you need. Private investors put their own money on the line, and if you’re not getting the return that you’re looking for or in the best time then it isn’t going to be worth your while.

DON’T accept a business investment until you’re absolutely sure that it covers everything that you need it to. Private investors should always be on the lookout for the next big opportunity, but at the same time don’t jump into an investment without all the details. Make sure that it offers you the best return, is a unique idea and one that can grow considerably. Also, make sure that you can get on with your business partners, as not doing so has the potential to destroy the business.

Private investors should always keep in mind these dos and don’ts. If you do, you’ll be able to make the best investment decision possible.

How can I get a Private Investor interested in my business?

admin — Thu, 03 Sep 2009 23:02:13 +0000

If you’re a start-up business looking for investment, chances are you’ll have considered a private investor. However when securing investment in this way you will need to be prepared, as they’ll have a specific set of criteria that you and your business will need to pass before they’ll consider you as an investment opportunity. But how can you make an investor interested in your business? For a few tips, read on.

To get an investor interested, you need to have a sound business plan and an exceptional business idea. The more unique the better, as it’s often the riskiest ideas that pay off the most. Don’t bore them with ideas that have been done too many times or that don’t offer anything new; make sure that your business is a new product or offers a new service, or offers an existing one in a way that’s never been done before.

After a sound business idea, the most important thing to do to appeal to an investor is to make sure that your business has the potential for growth and profit. As you would expect, the potential profitability of a business is key, as profit is the ultimate goal of any entrepreneur.

This is even more so with private investors. They’ll be risking their own money in your business, so they need to believe that their risk will pay off. Most look to see this growth within the first 5 years, and are often looking for a high return in the region of 20-30% per year. If you opt for venture capitalists, they’ll also be looking to secure their return in the form of the eventual sale of the business. Whichever you choose, make sure you portray this potential growth to the investor to get them hooked.

At the same time, you need to be realistic. Don’t show them figures that can’t be backed up with facts and sound business knowledge. They need to know that they can trust you and your business acumen, and if they don’t they won’t be interested.

An investor needs to be offered a nice chunk of the business. Again, it’s their own money, and if they’re not offered a good return they won’t be tempted to invest. Make sure you specify their exit strategy as well, as it’s no point offering them a high return if you’re not showing them how they can get it.

If you follow this advice, you’ll be far more likely to get an investor interested in your business. And if you do that, you have the potential to be more successful than you could ever be on your own.

7 tips to getting investment

admin — Thu, 06 Aug 2009 00:40:00 +0000

Getting investment can be vital to the success of your business. But how do you go about obtaining it? There are some things you can do to improve your chances of getting investment, so for a few of these, read on.

Make sure that your business is viable. It doesn’t matter if the idea is unusual, quite the opposite in fact, as it’s often the most original and unique ideas that become successful. But it does have to be backed up by sound business understanding and a clear vision of how you intend to make your business a success.
Make sure that you know what your business does. It sounds fairly obvious, but business ideas can often get lost and diluted in the thought process.
Your business needs to have the potential for growth. If the potential isn’t there, you won’t get investment. That’s the only way that investors will ever part with their money, so make sure that your business can grow and that you clearly portray it.
Your business plan has to stand out. Investors will be presented with countless business plans on a daily basis, and they’re only going to be interested in ones that stand out from the crowd. Make sure that your plan contains all the essential facts in an easy-to-see manner. If your potential investor has to scour through pages and pages of jargon before they get to the details, they won’t waste their time reading it.
Have a clear understanding of where your business will be in 3, 5 and even 10 years’ time. If you can’t see where your business is going, how do you expect an investor to? It’s vital that you can map out your future if you stand any hope of gaining investment.
Make sure that you understand the figures. An investor needs to know that they can trust you and your financial acumen, as they’ll be risking their own money to put in your hands. Know your finances inside out, make sure you have a clear financial forecast in place, and be prepared for some tough questioning.
Know what you’ll use the investment for. It’s no good asking for an investor to pay your wages – you need to have a clear guide in place that specifies exactly why you need the funding and where you’re going to use it in the business, and it needs to be legitimate.

Getting investment can be a tricky business, but is well worth the effort. If you follow the tips above, you’ll be far more likely to secure that much-needed funding without the hassle.

What can a private investor do for you?

admin — Sun, 26 Jul 2009 08:44:45 +0000

Private investors are the investment option of choice for many budding entrepreneurs and start-up businesses. But what can they do for you? Well, quite a lot actually.

Private investors are usually successful entrepreneurs in their own right, and will have amassed their own fortune from years of being successful in business. After running the show for so many years, a lot choose to use some of their wealth to invest in start-up businesses. This can not only help the business to become a success, but can add to the success of the investor as well.

Private investors have the ability to offer a large amount of investment to your business, often more than you could get from traditional routes such as banks, and it won’t be subject to the same terms and conditions. You usually won’t have to pay any interest or late payment fees, but instead will offer a proportion of your business in return. Although giving up a part of your business can be daunting, it should be thought good thing. The investment will undoubtedly lead to more profit than you could ever make on your own, so you’ll both be left wealthier than you were before.

But, private investors bring much more to your business than money. They have a wealth of knowledge and experience, and if they take an active role, will be able to bring this to the table to make your business even more of a success. Having someone experienced in business can be a valuable asset, as they’ll know the tricks of the trade and will know how to cope with every eventuality.

They’ll usually also have a huge number of contacts, which can be invaluable. Networking can make a huge difference to the success of your business, and having contacts already there can save a lot of time and effort.

After securing investment from a well-respected investor, you’ll be more likely to secure finance in the future as well. If someone respected likes your idea, then others will trust their opinion and will be more likely to be interested too.

As you can see, private investors can do a lot for your business. They not only bring essential funds to your venture, but can add to your business thanks to the knowledge and experience that they can impart. If you can, securing investment could be the best thing for you and your business.

Why Business Angels Invest in Start-up Ventures

admin — Thu, 23 Apr 2009 04:04:25 +0000

It sounds like a dream come true, doesn’t it? Someone who is willing to hand over their money so you can start a business? Who are these people? Where do I find them? Why would they do this?

The fact is there are people out there who invest in businesses. They are called business angels, or private investors. Often, they will provide the start up capital a new business needs to get up and running. They are business owners and entrepreneurs who have made their own fortunes. No matter what part of the country you live in, chances are there is an investor you can partner with. There are several reasons they do this.

As an investment they find what they deem a great business that has a good profit potential. They want a good return on their money, they are investors after all.

To share their skills they want to share their skills and experiences with others who are just starting out. By teaching you the day to day skills of running a business, they are able to reduce your learning curve, and therefore producing a profit in less time. This is their way of giving back; of helping others.

To learn it might sound strange, but successful entrepreneurs know that they should never stop learning. Everyone brings unique ideas and experiences with them. They may learn a different way of doing something or a new technology that was not available to them when they were starting out.

It’s important to point out that business angels do not invest in any business they see. You must be prepared and present a professional, complete business plan with growth projections, income and expense forecasts, marketing ideas, mission statements, etc. They will want assurances that you are completely committed to the business and will not walk away when things get tough. Meet with several investors and choose wisely; someone you will feel comfortable working with. Don’t be surprised if they want part ownership of your business, at least until it starts making a profit. They will want to be part of every major decision. Step back and learn do what they do. Eventually you will become a successful entrepreneur and you’ll be able to invest and help other people in start-up businesses.