People often asked the famous psychiatrist Sigmund Freud: What does the opposite sex really want? Much like in relationships, it is prudent for small and medium enterprises (SMEs) owners to ask, What do investors really want? According to the Entrepreneur, investors are not interested in how your products work.
What interests them is an in-depth knowledge of your target market, and how your products and services serve consumers. Business is all about offering a solution to a problem people are facing. Investors want to know what problems your products or services solve, and why will consumers part with their hard-earned money to buy your solution.
Today’s investors will readily invest in budding entrepreneurs more than anything else but they will want to know whether you and your team tick. Investors want to put their money in a team with a success track record.
Thus your staff need to have experience in your field of expertise. Gaps in managerial skills are a sure way of chasing away an investor. Investors will also track the knowledge you have on your competitors.
Remember, there is no such thing as a business that lacks competitors. It might not be direct, but be sure, competition is there. You might be the only one selling tomatoes in your area, but the supermarket that stocks tomato paste is your competitor. Making projections is perhaps your investors’ favourite word.
According to the Entrepreneur you should make projections on a cash basis, and be sure that you have really thought through your assumptions. Investors want to know where your revenue, cost and income projections have come from and how realistic they are.
Please, for the love of your business, do not make unrealistic projections in hope to tie up your potential investor. It will have the opposite effect. Be real. If you are not sure about your potential future income, present your investors with three different projections: best case, worst case and our expectations.
This will make it easy for the investor to make comparisons and make a decision. It is important for your to be well prepared before you pitch your business.