Having the answers to these questions can help you bring in the dough from investors interested in your small business! (See what we did there?)
Whether you’re talking to an angel investor, a family member or friend interested in your business, or if you’re crowdfunding, someone who’s investing in your business is going to have a few questions they want answered before writing a check.
Here are some of the top things investors want to know before investing in your small business. Having these things in mind will help you immensely when seeking out capital from investors, and will give you a better idea of your business’s current state of growth as well!
Find investors in your community with a Honeycomb Campaign
If you’re looking for investors for your small business, one of the best ways to do so is to run a Honeycomb campaign! Raise the capital you need for your next step by crowdfunding it from your customers, friends, and family, and get your business’s name out there in front of our community of small business investors. Fill out the form below for more information!
Your Industry Experience
You wouldn’t want to hop on a plane with a pilot who’s never flown before, right? Same idea here. Your investors want to know where you come from, where you’ve been, and where you’re going.
If this is your first time owning a business, that’s okay! Talk about your past experience in other establishments in your industry. For example, Ian Herrington, owner of Leavened Bakery and Cafe, worked in other Cleveland bakeries for years before going off on his own to open Leavened. Because of this experience, he was able to attract 57 investors to his crowdfunding campaign with Honeycomb!
Your Business’s Current Financial Health
Investors want to know that they’re making a sound financial decision in investing in you. You need to show that you can run a profitable business that has grown and has potential to grow even more. You want to be sure your assets cover your current liabilities, and that you have a plan for how you’re going to access capital for growth.
Your Business Plan
Here’s where you really get to show investors where your business is heading and why they should hop on for the ride.
A business plan is where you show where your business is situated in the market - how do you plan to make money, and where will you find opportunities to make more money? In a business plan, you can commonly expect to include market research, your business strategy, and financial projections and a timeline for when you expect to reach valuation by.
What Makes Your Business Special
Over all the restaurants/yoga studios/farms/stores in your neighborhood, why should this investor choose you to invest in?
On top of having a plan for your business and a strategy for growth, you need to be able to express what it is that makes your business (and you) unique! This is where you show investors what your competitive advantage is. Do you have a special proprietary recipe? A unique distribution strategy?
Often, this will be what sways an investor to invest in your business - you might have rock-solid financials and a great business plan, but if you don’t show the unique selling point of your business, an investor is probably going to look for an opportunity that does exhibit a competitive edge over the rest of the market.
The Investment Structure of Your Offering
What kind of an investment situation are you planning to offer? Do you want to offer equity shares, or a chance to lend you a loan? This depends on the level of risk an investor is willing to take on your business, and also the amount of control over your business you want to give to investors.
If you offer equity, you’re going to be handing over a percentage of the profits to your investor, as well as potentially some ability to make ownership decisions for the business. This has its pros and cons - for one, you can potentially make a great partner in your investor, but you also lose some of your autonomy as a business owner.
Debt, however, means that you can borrow money from your investor and pay it back with interest. There’s a fixed amount they receive, and when you pay it off, that’s effectively the end of the financial obligation on your part. They don’t get to make decisions for you, and you get to keep the profits for your company, no matter how much you make.
Is all of this important for crowdfunding?
To put it short: yes! While individual investors in your crowdfunding campaign might not invest the beaucoup bucks that an angel investor might have, nor will they want ownership stakes in your business, they’ll still want their questions answered about your business. This is why it’s important to have a well-crafted campaign page, and utilize as many opportunities to market your crowdfunding campaign as possible.
Having these questions about your business answered will allow investors to get a better idea of the investment they’re considering making in your business, and if it's what they want to hear, you’ll be one step closer to reaching your crowdfunding goals!
Getting funding for your business doesn’t have to be intimidating
But having the answers to these questions will certainly help you if investors start to grill you during your pitch! You can find investors for your business and keep ownership and profits for your business with a crowdfunded small business loan from Honeycomb Credit!
Fill out the form to receive more information, and head on over to www.honeycombcredit.com/grow to learn about our opportunities for small business owners!