5 Essentials for Winning Over the Best Investors Startups that thrive manage to eke out the first profits that convince investors to put in the money that grows the company.
By Murray Newlands Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Most new businesses fail within their first year, but some startups really run with their niche and become wildly successful. The difference is often a handful of variables that go into creating profits.
Not only do you have to take the value of your product into account, but you also have to factor in wages, customer service, branding and general business aesthetic, be it on or offline. Here are five important areas to focus on if your goal is to win the favor of the best investors.
1. Invest in quality, not quantity. True success will come when your business offers products and services that attract people for their quality, not because they can fit a budget.
Related: How to Win Over Investors in Three Minutes or Less
Many people are willing to stretch their budgets for more high quality products because they don't want to compromise on their investments or lose out on the best in class. Aim to prove to investors that your products or services are of the highest quality, better than anything else on the market. Better, not cheaper, is how you will impress the top investors and win their funding.
2. Be influential. It's essential that you have a strong social media presence to make your company attractive to investors.
"Having an effective social media profile comes down to two things: content and distribution," says Ryan Detert, owner and CEO of leading social media firm, The Influential Network.
Companies need to create content that's promotional and engaging. It's easy to post business updates but if there's not a mix of entertaining and interactive content, it will be difficult to expand your audience and show growth to your potential investors.
3. Be innovative. The best investors are always on the hunt for the most innovative companies because innovative companies yield the biggest returns.
Think about brands like Google, Facebook, and Instagram. Each of these companies brought something inventive and different to the table. As a result, they faced little direct competition and were able to grow into some of the biggest brands in the world.
It's important that you find a way to carve out a space in your niche. Offer products or services that nobody else does. Product-market fit is one of the first things that investors will look for. They"ll want to see that you have something unique to bring to the marketplace.
Think outside the box about how you can make your company work, how you can make it special or how you can disrupt the marketplace. Get creative with your branding, your products or services and even your funding.
Related: Find Investors for Your Business
Take South Carolina-based Palmetto Group, for example. They've managed to alter the way industrial solar energy projects are funded by providing crowdfunding opportunities to interested investors. Before Palmetto, solar energy projects were funded through massive corporate investments and government subsidies. The Palmetto Group has started to flip the industry on its head by enabling the average Joe to invest in solar energy opportunities. This approach to project funding has altered the traditional methods of investing and generated a lot of interest and buzz.
4. Start small. You don't need a ton of employees to get the job done, you just need a handful of dedicated ones. Investors want to see that your operations are realistic, functional and profitable.
The best way to ensure that your company is working at maximum efficiency is to start small. Only add more people or products when you're ready. A small but highly talented team is much more beneficial and cost effective to your business and it's growth. Start small and expand as necessary.
5. Persevere. This is on every "tips for success" list because it's really the best tip you can get.
The only thing that works in the long run is hard work and using time to your advantage. There's no magic pill or service you can implement to make your business successful. It has to come from you and your employees' elbow grease, your time, your effort and your passion. You have to want to succeed and be in it for the long haul. Good things come to those who wait, and work.
Every business faces adversity at some point in its lifetime. In the early stages, investors want to see how you handle that adversity and whether or not you're able to overcome it. Facing challenges head-on, rather than backing down, shows investors that your business is in it for the long haul and are dedicated to growth and success. Those are the businesses that they want to put their money into.
Related: Richard Branson on Preparing the Perfect Pitch
