One of the ideal ways to begin a search for startup funding offered by angel investors is to view the process as if you are one. Investors have plenty of money they are willing to invest in new businesses, but they will first want some assurances that risk is as low as possible given that new companies have an inherently higher risk to begin with. If you imagine yourself as the investor, then the risk becomes much easier to assess in advance while searching for business funding. The first step is to insure you provide answers in the business plan to what would be logical and normal questions about risk.
Any business plan that is prepared for the purpose of finding business funding can use this approach. It doesn't matter if you are looking for equity partners, angel investors or venture capital. Read your business plan with a critical eye and ask yourself if you would be inclined to approve funding if it was your own money at risk. If you follow a typical business plan format, you have covered the obvious issues like marketing and profit projections, but have you really thought through the plan in the same way a funder would?
It's difficult to be objective when you have a great idea for a new business, and you believe that it will take the market by storm. Yet it's important to remember that no one will fund your business until the business concept and plan have been thoroughly scrutinized. Considering your request for funding from the viewpoint of the angel investor can help you keep a sharp edge on the proposal so that it remains focused and on target.
Ask the Question: Am I the Only Investor?
Pretend you are an angel investor who has been asked for money for an untried business. The first questions that will be asked include the following.
· Are there other types of funding that would be more suitable for the business?
· Are business loans an option?
· Has the entrepreneur been searching for funding for a long period of time?
· Have other investors shown an interest in the business?
· Could the risk be minimized by bringing in multiple angel investors?
· Can the entrepreneur prove he or she is qualified to operate this business and able to provide a well developed business plan?
These are the kinds of questions you need to ask yourself as you analyze your business idea and plan. Angel investors willing to provide startup funding will want a wealth of information that includes financial projections, a marketing plan, names of qualified managers, organizational chart, analysis of strengths and weaknesses, and potential long-term funding needs.
Ask the Question: When Can I Expect to Break Even?
It's a fact that entrepreneurs will have trouble attracting a variety of investors that include angel investors, venture capital and equity partners when they fail to consider the needs of the business after startup. In the excitement of actually starting the business, the new business owners fail to focus on the level of investment needed to keep the business going. The Small Business Administration is the first to say that a capital shortage is a major reason businesses fail.
Ask yourself this question: When can the new business expect to break even?
Ask the Question: Are You Ready with Answers?
Pretending you are the investor as you develop a business plan makes good sense. Answer the questions you would ask if it was your money that would be used to make business loans or other types of investments. If your business plan leaves too many questions unanswered then you can be certain that angel investors will label the venture as too risky.
Get more info about finding angel investors for your business venture at the Funded website or visit the Funded blog at http://www.funded.com/blog.
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