Finding investment for your business can be a challenge. Once your company has decided which type of finance to seek, you need to ensure you approach potential investors in the right way, with key information to hand.

Be clear on your business plan

Most potential investors will want to see your business plan when considering whether to offer you finance. Make sure this paints a clear explanation of your business strategy and includes full details of the specific, measurable goals which the finance will help you achieve.

Don’t rely on having everything on paper. Most investors will want to quiz you to ensure you understand how to put your plans into practice, so do your homework thoroughly. Ask experts – like your accountant – to brief you on any areas you do not fully understand.

Additionally, it will help enormously if you can demonstrate a clear record of success to show that when your business has aimed for particular goals in the past, it has achieved them.

Understand your finances

Make sure you completely understand the state of your business finances before approaching any investors. They will want to be satisfied you have a firm grasp of the financial state of your firm, and most will ask about your company’s recent performance as well as your long-term record.

In particular, loan providers like banks will be keen to see projections demonstrating your company can meet the repayment schedule of any loan you take. Ensure you have up-to-date, realistic forecasts for the coming year, and take some time to assemble supporting data.

Venture capitalists are usually on the lookout for a high rate of return, so will be more interested in your plans for growth. Make sure these demonstrate a thorough knowledge of the market you operate in and are backed by evidence.

In all cases, be realistic rather than overly optimistic. For instance, if your company doesn’t have the potential for high growth, venture capital probably is not the right source of finance for you.

Your character matters

Some sources of finance - particularly business angels and other more hands on investors – will be interested in the people behind your business. If you are looking for an investor who can offer expertise as well as cash, they will want to be confident you can work together.

Make an effort to get to know them, encourage them to be upfront with any concerns and do the same yourself. When you rely on investors for more than financial support, you need to feel at ease working with them.

John McGarvey, http://www.mcgarvey.co.uk