With a degree of economic uncertainty in the air as interest rates rise around the world, being able to get investors on board is more important than ever. Being able to clearly demonstrate your ideas to external parties is only going to become more critical, writes Alan Manly OAM, CEO of Universal Business School Sydney (UBSS) and author of The Unlikely Entrepreneur.
Let’s look at five ways to impress investors and give them confidence in your ability to deliver:
1. Knowledge is power
Whatever your great new idea is, own the idea and know all about it. Research every angle of the problem that you are solving, and all the solutions that you can find that then lead to how good your idea is.
Be it technologically advanced or a simple implementation of a great approach, explain it so that a child could understand it; show some empathy to the less informed investor. You are in love with your idea and jumping out of the dark at an investor with new ideas.
Have in your presentation credible and clearly defined references; the more the better.
2. Get a customer
If your product can be implemented, all the better. Be it as a test site for free, any proof of concept is valuable.
If the product or service is not able to be delivered yet, try to find a potential customer who will attest that if it was available they would seriously consider it, and how it would advance their company, as in improved customer service or general efficiency.
3. Cash flow
Once you have a few customers you can project that if you had more money to invest, then you would get more customers.
With your current customers, project the cash flow to demonstrate you have a positive cash flow. You want to have more cash coming in than going out over a period of time, especially before you run out of any investment capital.
The numbers need to really add up. If nothing else, investors can calculate numbers in the blink of an eye.
4. Return on investment
Once you have cash flow, you now build up to having more cash than needed to operate the business. That is when you get an investor’s attention.
That surplus to immediate needs is potential dividends; that is when you get investors, by speaking their language with expressions such as ROI – return on investment.
5. Sustainable returns
You have found a customer, got paid and kept a small surplus? Now the challenge is not about the operations of the company, but rather dealing with the world of investors.
Show me the money, they cry, but not only once – each and every financial quarter for as far as the eye can see, on the widest of Excel spreadsheets.
All of these steps might sound quick and easy, but it’s best to practice your pitch on family and friends first. Once you’ve made a compelling business case to those closest to you, then reach out to an accountant that you don’t know personally to review your presentation.
This might require that you go over the presentation many times to fine-tune every detail, but in the end, you’ll be better positioned to entice and impress investors.
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