Making sure your investor monies are being used legally

Some small businesses just have difficulty raising money or getting funds from traditional financial institutions such as banks. In this case, they usually bring in family members, friends, colleagues or venture capital investors to help them out in launching their business opportunity.

If you think that you are one of those businesses and need funding from non-traditional financial institutions such as close family members or financial investors, then just remember that these investors want something in return for their contributions. Those investors will have no problem investing in your idea if they have a good feeling about you.

Of course you need to present your investors a plan showing them the potential profits from your business. But they also care whom they are doing business with. They want to invest in someone they with whom they feel comfortable, and more importantly, who is honest, trustworthy, ethical and competent. They want to be convinced that their hard earned money is being used honestly and legally.

Before you present your business plan to help with your final thoughts and arguments to the prospective investors, it's probably beneficial to have some understanding of how they think. You need to show them a positive attitude and passion for this new business. You need to find ways to make the investors feel comfortable or at ease with you. You want them to think that you are very dependable, qualified, well educated and responsible to be trusted with their money.

Once trust is established, investors want reassurance that your business will continue to make profits and good returns, not only for the first few years, but also hopefully for a long time. They also want to make sure that everything you are doing is legal.
Furthermore, they are interested to know:
 If your business goals are compatible with your personal goals?
 Who you chose to be on your advisory board and why?
 Which successful company your business is trying to model itself after?
 And will the management team be able to improve and progress as the business expands and experiences changes?

Give the investors a vision of your business and present them with a very well prepared overview of who you are, what you sell, why you highly think that your product or service is valuable and what you need the funds for. Once they start to know and trust you, you can begin planting seeds of your passion and devotion for this business opportunity. Next, provide them with all detailed information about the people you are considering having on your board such as their education, qualifications, experiences, skills and expertise in that particular business. Of course, don't forget to involve some of your investor's people in all of this business planning. They certainly have lots of skilled people as well who can help you in lots of different ways.

Prepare to give your investors a complete and comprehensive history and benefits of
 the type of products or service you anticipate you offer,
 the kind of competitions and challenges you may face along with different strategies that you have in mind to conquer these struggles,
 the size and interests of your potential consumers,
 you plan of action to market your product or service,
 how much spending, sales and profits do you anticipate to generate for the next thee years.
 a written document from an attorney or legal committee showing that your venture is legitimate.

As a business owner, you want to be honest with all your dealings. It is important to know that you can be trusted with someone's money and that you are going to use every penny of it legally and solely for your business needs. Don't disappoint those who put their trust in you and in your ability to succeed in this competitive world of business.

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Categories: Managing Money,

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