No matter how great your business idea is, one essential element of startup success is your ability to obtain sufficient funding to start and grow the business.
Comfort, a hard working and vibrant lady who began her Beauty and Skincare company a year ago has been able to grow her company to a very profitable position in the industry with her own capital and supports from family and friends. Now her business has begun to attract Investors nationwide.
How is she going to manage these investors, keep them happy and ensure they keep funding her business growth? Are you having similar challenges in your business?
This article shows us how to manage investor relations effectively.
HAVE TRACTION
Now the key interest to anyone who will invest in a company is to see evidence that an idea or product works. Founders need to somehow show this either by some early level of commercial activities or a minimum viable product (MVP) that can be tested. It is important to show progress as investors look for signs of the company’s growth to determine potentials, product -market -fit and be assured the founders have more than just a good idea. It may be that at this level, the product or idea is still ‘crude’ or not packaged appropriately but it starts a conversation going on a good note.
KNOW YOUR INVESTOR
Research your investor’s portfolio. Depending on their background and experience, some of your investors might be extremely analytical and like to pour over the numbers whilst others might be more interested in the bigger picture, the dynamics of the team and potential over the long term. Make sure you get to know your investors individually so you can tailor your approach and make sure the information you provide is right for them and will answer the questions they are likely to have.
GIVE HONEST REPORTS
Always be honest! Investors can spot it miles off if you’re being disingenuous and being liberal with the truth – and it will always come back to bite you at a later date. If you’ve had a great quarter, signed a new deal, then let them know. If you’ve had a bad quarter, lost businesses, don’t hold back or try and conceal bad news. Being transparent and upfront from the onset will help build trust, ensure a stronger relationship that will make your investors feel more involved and positive about the business.
Remember that investors are on your side and want the company to succeed. They know that companies have ups and downs, especially start-ups and they might just be able to help or provide constructive advice.
MANAGE EXPECTATIONS
Success doesn’t happen overnight and investors know this. So, while selling your business vision, ensure that your projections are achievable. It’s always better to beat forecasts more often than not, than have to explain why the numbers have been missed each month.
ASK FOR ADVICE AND HELP
Investors are not just looking to write a cheque right away. Most investors have built successful businesses from scratch in the past. Use their wealth of knowledge and experience as well as their contacts and ensure you circle back after, always showing your appreciation for their guidance.
At Knight & Bishop, we help guide bold and audacious entrepreneurs as they make business decisions, even as it relates to investors. We support your business on its growth trajectory through advisory and hands on assistance as you build. Let’s get talking today.