When do you take on an investor? Let’s leap over the first hurdles and assume you have a business or product that investors find attractive. Sometimes they find you because you found and subsequently pitched your idea to them. Sometimes they find you because some kind of buzz has been generated about you. Sometimes they stumble across you.
Presumably, when you make your pitch, you’ve already decided you would rather have an investor than not. But how do you reach that determination in the first place? And what if one comes knocking, unsolicited, on your door?
Key Considerations – When It Makes Sense
There are many considerations to make when determining whether or not to take on investors, but four of the key ones are as follows:
- Can the business or product survive without a cash infusion?
- How critical is speed-to-market?
- Do you need the sales and distribution channels an investor can provide?
- How fast do you want or need to, versus how fast can you grow?
If the business or product simply cannot be sustained or developed without a cash infusion, your rich uncle isn’t going anywhere any time soon and the bank won’t lend you money, then the decision is almost a no-brainer. You either mothball the business or seek an investor. The problem is, if you are that far down the road, the likelihood of finding an investor quickly enough to make a difference is not very good.
Do you have a great business or product that is only great if you can get it to market sooner rather than later? Then it might be time to get an investor. The influx of cash and potential business connections the investor has may be the difference between getting the product out there in a timeframe that takes advantage of market conditions, or literally being a day late and a (few) dollar(s) short.
And how about that sales and distribution channel? The greatest products in the world can’t be sold if you don’t know how and don’t have access to the right logistics. This is a major area that an investor can help beyond the provision of cash because chances are they have either done it, or know someone who knows someone that can get it done.
Finally, if you have a high potential business or product, you just might find yourself in the enviable position of needing to suddenly or immediately produce on a very large scale. Sudden growth versus gradual growth is more likely than not to require investment to enable it, which might signal that it’s time to bring on an investor.
Pre-Planning Makes it an Easier Decision
For business owners, entrepreneurs and inventors, it can be an emotional, gut-wrenching decision. This “thing” is your baby. You don’t want anyone messing with it and you certainly don’t want to give up your rights to it. But sometimes, the harsh reality is that you have to give up at least some of it in order to see that baby survive and thrive.
Regardless of your reality, it is much simpler to estimate a timeframe in which the involvement of investors can be considered if you have defined a clear vision and realistic plans for your business or product.
That’s where Business is ART, can help. Start with the book and then try out my Odds Makers Series video training. They’ll teach you how to develop the business, strategy and business plans that will assist you on your journey. It’s a far less expensive option than hiring a consultant, and it is a proven, effective approach.