7 Tips To Find Investors To Grow Your Small Business | Fora Financial Blog
7 Tips To Find Investors To Grow Your Small Business Faster
January 10, 2020
Investors having a meeting at the table

7 Tips To Find Investors To Grow Your Small Business Faster

Most business owners start small and use money from their personal savings. When the business succeeds, they often find that expanding their operations will cost more than the funds they’ve generated from the business.

At that point, they may seek investors who can help provide funding. However, not all investors are created equal, and not every deal will be fruitful to the business owner. By learning more about how to find people to invest in your business, you can determine the dynamics of any investor deal.

Why Are Investors Important to Level Up?

Small business owners that are ready to level up quickly learn that growth comes with a price. The ideal scenario would be to use the profits to fund the growth, but that isn’t always possible. The rate of growth may be greater than anticipated by the business.

Small business owners have the option of asking their banker for a business loan. While it’s possible to obtain a bank loan, it’s a difficult route to get approved

Some companies can’t risk taking on more debt as they’ve reached their limits. Instead, they can find investors to help raise money through equity financing. The tradeoff is giving up a portion of business equity in exchange for the funds.

Many investors are experienced business owners who can serve as advisors to businesses they fund. These investors have connections that can be beneficial to the arrangement. The popular show Shark Tank shows several of the investors acting in an advisory capacity.

Another benefit of finding investors is that it forces you to create a clear business plan for growth. You’ll need to provide projections on how you’ll manage the capital you seek. Investors are likely to ask tough questions during the process.

The Top Methods for Finding Investors

While the industry for business funding is growing, business owners shouldn’t consider this an easy avenue to obtain capital. Many investors have objectives that may not align with the needs of your business. It pays to learn the motivations of these investors.

Start with learning about the different avenues available to obtain capital for your business. This will help you discover where to find investors. Several options will be covered in this article. It’s important to learn the motivations in the options you choose. 

You should have an idea of how much cash you’ll need and how much equity you are willing to forfeit. However, not all the choices discussed require you to lose equity.

1. Hosting Events

Hosting events can help you provide information to investors about potential opportunities. The best aspect of this method is that investors are present at the events, likely looking for new companies to invest in. You’ll meet investors during the events, and some may be interested in your business.

Often, venture capital firms will often hold seminars offering tips for business owners looking for funding. Attending these events can help you discover crucial people in the industry.

Hosting events provide networking opportunities with other entrepreneurs who may have obtained funding in the past. These resources can give you insight into their experiences.

2. Online Fundraising Platforms

It’s no surprise that online funding platforms have emerged. They’re a great way to obtain capital, and in some cases, no equity is forfeited. Crowdfunding is one of the biggest virtual fundraising concepts, and in many cases, you keep the equity in your business.

Kickstarter is the most known for this type of funding, but more continue to emerge. Check each crowdfunding website for the rules before starting any campaign.

There are online lending platforms, including peer-to-peer lending and microlending. These platforms can be used for quick fundraising, but aren’t likely to be useful for helping businesses grow. 

Posing at events for fund raising

3. Blogging For Inbound Attention

Blogging continues to be a viable strategy to attract investors. The aim of blogging should always focus on quality content without too much pitching, although some sales-related material may be necessary.

Regular blogging presents useful information to investors. It helps them learn the motivations of a company. It also shows how businesses engage with their customers.

The content for the blog should revolve around your product, but it also should be interesting to investors. Of course, as your strategy matures, your blog should be used to sell your products or services.

4. Social Media Outreach

Social media outreach is a way to get the attention of influencers. When this happens, your concept or business idea can accelerate.

LinkedIn is popular with investors. They use it to search for potential companies to invest. When you keep active on social media (especially LinkedIn), you may find investors reaching out to you.

A potential investor is likely to pay attention to a business that has a healthy number of influencers advocating on their behalf. It adds credibility to the business, which is often good for sales.

5. Accelerator Applications

An article in Forbes states that accelerators “are fueling entrepreneurs and startups with supportive ecosystems and plenty of fresh funding.” These accelerators often provide mentorship and other resources to help the entrepreneur succeed. 

The feedback received by these accelerators can help start-up businesses move past the early stages of planning. The capital provided by these programs varies depending on the objectives of each. Some will offer seed capital, while others will help the entrepreneur find capital from other investors.

One goal of these programs is for entrepreneurs to participate in a demo day. This event gives businesses a chance to pitch their concept to several angel investors and venture capitalists. 

6. Email Outreach and Marketing

Most likely, you’ve heard the phrase, “the money is in the list.” The list refers to contacts you have gathered to buy your products. Potential investors may be interested in getting on your list too.

Email outreach is an effective tool to capture leads. The crucial aspect of this strategy is to offer value for people to want to stay on your list. Too many small business owners bombard their list with numerous offers. This action causes people to unsubscribe to your list.

Most companies will use autoresponder services to capture emails. These services offer useful tools for the entrepreneur, along with list management.

7. Get The Word Out: Offering Things For Free

People love to receive free items. When you use this tactic to get the word out, you’ll have to separate the freebie seekers and fence-sitters from those who are serious. This can be a challenge.

Although the effectiveness of offering freebies has waned, it can still be useful to implement the strategy. White papers are a great mechanism to show potential customers and investors what your products and services are all about. They tend to be less sales-oriented material, which adds to their appeal.

Tips To Find Investors To Grow Your Small Business Faster Infographic

Alternative Options To Investors

Are you in a growth stage? Consider using your personal funds. You have already proven that your business is viable since you are in a growth stage. If you have extra cash, you could apply it to your business. 

Did you know that Sam Walton, the founder of WalMart, opened a Ben Franklin store with a loan from his father-in-law? There are several success stories of people asking friends and family for cash for a business. Of course, there are many examples where it caused problems, too. It’s crucial to keep the arrangement professional.

Although you could try to obtain a government grant, know that these are often earmarked for special purposes. A better option for government funding may be a Small Business Administration (SBA) approved loan. The government doesn’t usually loan money but guarantees a percentage of loans to approved banks.

Don’t dismiss banks when obtaining capital, as it cannot hurt to try. However, if that option does not pan out, consider working with us at Fora Financial. We help small business owners obtain the capital they need for starting up and expanding their businesses. Get a free quote from one of our Capital Specialists today.

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Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

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Fora Financial is a working capital provider to small business owners nationwide. In addition, the Fora Financial team provides educational information to the small business community through their blog, which covers topics such as business financing, marketing, technology, and much more. If you’d like to see a topic covered on the Fora Financial blog, or want to submit a guest post, please email us at [email protected].