When starting a new business, there are many factors to consider in terms of budgeting.
There are one-time vs ongoing costs. There are essential costs, and then optional, not-so-essential fees. You'll likely have fixed expenses, such as rent and utilities, and variable costs, which depend on the sales of your product or service.
Some of the most basic startup costs include furnishings of your brick-and-mortar, essential tech equipment, website costs, and advertising costs. That's not even including the price of labour.
Needless to say, having business investors can help you achieve all this and more. Investors offer their capital to you in exchange for long-term gains, such as a percentage of the profits of your business. They help many an entrepreneur get through the initial stages of opening a business—and you need them.
But what do they look for in a project? How can you entice an investor to put their money on the line for you?
Business Investors Want to See You've Done Your Research
How is your unique product or service going to solve a problem for the community? Do people really want what you're selling? Do you already have a small fanbase waiting for your launch?
These are all things to consider including in an executive summary of your idea. You'll need to show your potential investors more than your pitch—you'll need to offer up numbers. Market analysis of your industry, how your competition is faring, how you plan to operate and make a profit.
They'll want to attach their capital to an idea that's adaptable, innovative, and solves a pain point. For example, my modelling agency, Bubblegum Casting, has begun a video interviewing and auditioning service, allowing people to continue to hunt for work while maintaining safe distancing guidelines. We learned to adapt and make things work for us.
How is your business planning to adapt as it grows and the world changes? Because that is what will make you attractive to an investor.
They May Want to Participate in Your Business
Understand that while some investors agree to be 'silent,' others may want to play a decision-making role.
You'll have to consider what you're okay with—do you want your investor to be a partner, too?
In some cases, this relationship can work very well. You may want your investor to be more than a check, but a viable part of your operation. Whatever you decide, it needs to get discussed with your investors and a contract drawn up accordingly. Both parties should have similar wants and needs.
Offer an ROI
Why is someone considering your project, to begin with? It's likely because they're expecting a return on investment.
So, give one to them!
Now, an ROI is typically relative to the investment's cost. It's standard to give back a small percentage of the business to the investors. Divide the benefit of the investment by the cost of it, garnering a fair percentage that works for both parties.
Fund Your Startup With These Guidelines
Business investors are a vital component to any excellent startup plan. They offer capital that many entrepreneurs don't currently have, allowing them to get their vision started when they otherwise may not have afforded it.
My name is Adam Jacobs, and I'm the incredibly busy managing director of Bubblegum Casting and Hunter Talent. I work with some of Australia’s biggest brands, media properties, and agencies to secure talented children to work in television, film, and modelling roles. I’ve recently launched an office in LA, too.
Take my advice to get your business up and running!