There are multiple ways small businesses can grow. They can increase in size organically through growing their customer base, or they can improve in scale by offering more services or products. However, another attractive way for businesses to expand and develop is to find an investor. An investor can help a business by providing some financial aid and other expertise that can be used to improve operations and open the door to new avenues your small business can explore.
However, investors aren’t going to back any old business. In fact, there are many criteria investors use to figure out if a business is right for them, and if it’s going to prove to be a safe investment. If your business is looking for additional funds, and want to attract an investor to support the cause and organisation, then there are some important milestones and features you need to hit to increase your chances of getting someone on board. Here are some:
Are you making a profit?
One of the main things investors look for when supporting a business is that they want to know how much money that business is making without their help. Investors are careful not to back a company that isn’t self-sufficient. They want to know that the business doesn’t rely on their funds to survive, but instead could do with the funds to help them grow further.
It may be a romanticised trope, but it’s dangerous to view investors as saviours who can wipe out debt, and, in the most part, investors don’t want to be that. Instead, they want to be partners to help take your business to the next level.
Are you growing?
The speed of which your company has grown since its inception can really excite potential investors, as it demonstrates that your company has potential and is something that customers are craving. They also want to see if you’re continuing to grow, as they don’t want to attach themselves to a company that has already hit their ceiling, as that means that they might not get a good return on their investment.
All the most profitable businesses to currently invest in are young and have reached where they are at a rapid rate. Investors want to be the catalyst that boosts your expansion and your profit margin, but they won’t make you more successful unless you have the right groundwork.
Are you unique?
As well as being young and fast-growing, the majority of the best businesses to invest in are incredibly unique and diverse. This is important for investors, as they want to help businesses that are doing something that few others are, as this can help them carve out a market that lacks serious competitors, which can help with growth. It’s important to consider that there is a difference between uniqueness and niche.
Having a niche company may make you appear different, but there may be limits to your target audience, especially if that niche isn’t too popular. You want to create a product or business that everyone needs or wants, but that not too many are providing. The best way to ensure you’re unique is to research your related markets and investigate your competitors.