As a startup entrepreneur it is possible to get anxious when it comes to the thoughts concerning raising capital for your business. The investors who are experienced enough know that you need to be smart as well as skeptical when reviewing your opportunities, besides creating awesome marketing strategies for your business, having an effective team and mostly delivering a great product there are still a few boxes that need to be checked before you dive into investment. Here are a few things you should know before you start investing.
Don’t Invest in a Business Plan
There is a popular belief that business plans are capable of generating business financing, this is not true. It is true that there are various types of financial options that need a business plan to succeed, but no one invests in a business plan. As an investor a business plan is only meant to carry information and ideas on proceedings, but you would invest in a product, company or people instead.
Look for a Dynamic Market Opportunity
What is the size of the market that your business is aiming towards? If you’re looking to invest in something that already has existing solutions in place, then they should be able to explain to you how their solutions differ from others. If it is a new market you’re planning on investing in then your focus should be on the expected growth of that market. Look for something that is solid and promising.
Are you comfortable enough to take risks?
When it comes to investing, there is very little that is guaranteed and every investment comes with a degree of risk. You can lose money as quickly as you got it or you could gain more than your initial investment. If you’re looking for money you can have quick access to, then you shouldn’t bother with the investment. You need to prepare yourself and have back up plans incase your investment cash takes a plunge, the reward for taking on a risk however is the possibility of a greater return on that investment.
Consider a mix of investment varieties
You can protect yourself against substantial losses when all your investments are not of the same asset category. The conditions in a market that is responsible for causing a category to fall could be responsible for causing another category to rise. So by investing in more than one category you’re more likely to reduce the risk of losing all your money in one place.
Always have an emergency fund
Easier said than done but very necessary for a startup entrepreneur, it is understandable that a need to use this fund may arise but it is also wise to follow the smart investors and place enough cash in a savings product. This money should not be touched so at least you know if anything like sudden unemployment should come up, that money will be there for you when you need it. Another option would be to take out a business insurance policy in the event that your investment takes a downward spiral, the insurance on your business would help you find your footing again and keep your business running.