6 Ways to Convince Investors Your Business Is Ready to Grow

Convince Investors BY MARTIN ZWILLING, FOUNDER AND CEO, STARTUP PROFESSIONALS@STARTUPPRO

1. Quote market research and input from outside experts.

No matter how passionate you and your friends are about your solution, it doesn’t mean that if you build it, they will come.

Seek evidence from recognized sources, like Gartner Group, and spend time with industry experts and real customers, before quantifying your opportunity and prices.

2. Start selling it on social media before you build it.

Marketing is everything these days. On the average, it takes as long to build marketing momentum as it does to build the solution.

Really listen to the feedback you are getting. If you wait to begin marketing until your product is final, you will find it very expensive to pivot to meet real world input.

3. Build a realistic revenue model and price, based on cost.

The free model, with an implied intent to monetize later, doesn’t work with investors anymore. It takes real money to sustain a business, with a margin in the 50 percent range, and some realistic milestones and metrics. Sell at least one at full price to a real customer to show traction.

4. Document and initiate a multi-faceted marketing plan.

Word of mouth and viral marketing alone are not adequate, and a website is not all you need for credibility.

To get the visibility and distribution for scaling, plan on one or two levels of partner relationships, as well as real events and promotions early. Traction is marketing and sales results.

5. Gather early customer testimonials and commitments.

Great customer experience expectations these days span the range from shopping, closing, delivery, usability, to support. If you don’t have real customers yet, focus on the size of the pipeline, letters of intent, and penetration into recognized retail and distribution outlets.

6. Show team organization and preparation for scale up.

New ventures requesting funding without credible operational and financial leadership will likely be declined.

Don’t assume that customer-facing employees can be hired and trained at the last minute. Your plan targets and milestones in these areas are key to achieving the results you expect.

I’m not suggesting that all these business elements need to be perfect before you ask for funding or open doors for business. As an active angel investor, I do expect founders to be able to communicate a plan and progress toward these elements, just as I expect them to understand and communicate all the elements of their technology and their solution.

There is no magic indicator in business, just results. The more evidence that you can provide of customers in hand, or waiting impatiently outside the door, the more likely and timely it is that you will be able to achieve the next step.