This Is Why No One Wants To Invest In Your Business
Getting funded is going to be one of the hardest things many entrepreneurs will face growing their businesses. Many people will look down on you, some will discourage and advise you to quit running the business, others will give you a thousand reasons your business will fail, and several others will let you know outright that you will waste their time, and so, their money.
As stated earlier in previous articles, growing a business is hard, and depending on the industry you’re running one in, it can be even worse.
If you’ve tried raising money to grow your business to no avail, here are 6 reasons no one wants to invest in your business:
1). Your Business Doesn’t Need Funding:
That’s right! Some businesses don’t need funding. A web designer, for instance, would have serious problems raising money to grow his or her business, a consulting firm will face the same problem, and the list goes on.
Service businesses thrive largely on direct marketing and referrals. Asking investors for money to grow one makes you sound like you don’t know what you’re doing.
While raising capital to promote your business could bring in a lot more customers, running straight to raising capital from the get-go will prove extremely difficult for you to achieve.
2). No Other Business Does What You’re Doing:
Most investors don’t like trying new things. The problem in this is the first person to ever try something is hardly ever the one to succeed in it or to even maintain a top position in the market.
Smart entrepreneurs know it is always best to innovate than to invent. Inventing attempts to change the status quo, and humans, especially Africans, are always very repulsive to change.
If your business is all about a whole new concept, product, or service, first try to make some sales and achieve a minimum critical mass of customers. This will prove to any investor that your awkwardly new business may be a great bet after all.
3). Your Business Growth Is Very Slow:
Slow or no growth sends red flags to anyone analyzing a business for investment. Venture capitalists, for instance, prefer companies that have potentials to grow really fast and exponentially. They prefer those companies because they could get very large returns on their investments within the next 3 to 5 years.
If your business has no such potential, then getting investments may prove a bit difficult.
4). You Have No Partners:
It is widely said that two heads are better than one. Even better, three smart heads with an impressive track record coming together to run a business, sends investors running towards their direction.
A programmer needs to partner with a sales expert. A sales expert also needs to partner with a product idea genius, and so forth. People compliment themselves in a business, and this is why it is difficult for an individual to convince investors that they can do it all alone.
If you’re running a business and have no partners, convincing investors that investing in your business is a strategic move for them is going to be very difficult to achieve.
5). You Don’t Understand Your Customers Well:
A deep understanding of your target customers will enable you know their problems, wants, age brackets, their next best replacement products, what they prefer to stay away from, and a whole lot more. This data will give you the opportunity to position your brand in ways that will ensure you keep having a lot of customers walking right through the door, because you’re constantly solving the exact problems they’re facing.
If you don’t have a deep understanding of your customers, investors will flag your startup as one with a great risk of losing their money, because you’ll appear to be highly inexperienced.
6). You’re Not Making Any Money:
Been cash flow negative is one thing, but not making money at all is another! Investors are wary of businesses who generate very little or no revenues at all. It shows there’s a problem with either the product, service, potential market size, or even the people running the business.
If you’re going to convince investors to put their hard-earned money in your business, you must be ready to show them how your financial statements have been churning in impressive figures, and how close you currently are to becoming profitable or being even more profitable.
What are thoughts on these 6 reasons no one wants to invest in your business? Let me know by leaving a comment below.