For many entrepreneurs and small companies, the uncertainty of today's economic climate is making it increasingly difficult to attract investment.
The results of a quarterly global business barometer conducted by The Economist highlight that business confidence is ebbing fast. Investors are becoming very cautious, driving many away from the first stage of investment with small businesses and entrepreneurs.
Glen Hopkinson, director of Connect Yorkshire, an organisation helping young businesses to secure investment, believes that in today's economic climate it is more important than ever for those wishing to attract investment to focus on the things that really matter. "Understanding the effects an economic slowdown will have on your business will impress investors," he said.
Connect Yorkshire offers the following tips on how to attract investment in tough times:
Demonstrate return on
investment
With investor caution at a high, greater assurance is needed
for investors to put their money into your business. Clearly explain how their
investment can give them a return, by demonstrating realistic forecasts and
projections
Show healthy profit
margins
Profit is a clear figure that will show that you know how to
run your business and raise investors' confidence in your ability. While you
may only be able to present low sales figures, healthy profit margins will
demonstrate your business' aptitude to be ready to make more money when the
economy stabilises
Continue to grow
While profit is more attractive than growth, just because
the market is cautious about making expansion decisions does not mean you need
hold back on growing your business. The ability to grow steadily will illustrate
a capacity to reward an investor in stronger times
Look after small
customers
Aim to exceed the expectations of your customers who are
buying from you in these tough economic times, regardless of their size. By
running a limited customer base of small clients you can provide a level of
service that they will not only come back to you for, but also recommend to others.
A reliable long-term cashflow can make your company much more attractive to
investors
Watch your
expenditure
Cautious investors want to see evidence of stern financial
management. An investor needs assurance that the business can conserve money
both to see it through the downturn, and to take advantage of other
opportunities as the economy improves. Financial discipline is the key to
securing investment
Get good advice
A great deal of information and help is out there for small
businesses and start-ups, so make sure it is from a trustworthy source. The
best advice will always be from people who have been there and had real
experience
Market yourself
Investors back the people involved, so demonstrating and
pitching your abilities, vision and track record is just as important as your
business plan, products and ideas. Explain how you will work with them.
Investors want to see that any economic uncertainty will not alter your drive
to make a successful and profitable company
For more information see www.connectyorkshire.org
