A lot of entrepreneurs are still seeking the path of success and struggling to get investors. This blog throws light upon the common mistakes that an entrepreneur commits while seeking investment. It further offers some useful tips that need to be followed to become a successful entrepreneur and to grow business.
How is your product solving market’s problem?
Young and budding entrepreneurs (also the experienced ones) offer solutions to issues and problems which do not not exist in the real life scenario. Most of the entrepreneurs limit their thought process and offer solutions to problems faced by them on personal front. They wrongly presume that every individual need answers to this common problem. But they need to pop their solve the problem that the market is facing then nobody is going to buy your solution. Forget about consumers, it would be very hard to even convince investors to put their in money in your dream solution. It is very unlikely that everyone has same problem for which they are seeking an answer.
The best approach before developing any product or solution is to have an in depth market research conducted with the help of surveys or questionnaires and connecting with as many people as possible to discuss their problems. Free survey tools can also be used such as – SurveyMonkey and Zoho Survey.
– Product planning surveys offers insider knowledge to plan a new products, growth in business and success in today’s competitive marketplace. (Source)
– It is easy to track consumers’ attitude towards the product by conducting surveys in regular intervals. (Source)
– Surveys are quick, affordable than any other technique of data collection and are easy to administer. (Source)
Based on the problems they encounter, you should build up an ideal solution to it. You don’t have to be bias as entrepreneurs in framing questions that will give you the favourable answers. The assistance of professionals and focus group in preparing survey questions will be beneficial for entrepreneurs to know the real thoughts of people.
What is the size of the market of your product?
For having a fair understanding of your market and its size, an entrepreneur has to be keen on their target market and audiences. Factors such as – age, geographics, psychology, demand, psychographic etc play a vital role in figuring out your market’s size. The best approach is to target niche markets which have not been served or are underserved in the industry. This is the most convenient and affordable strategy to gain traction. Your product should reflect credibility to the market and also about its size. The share that entrepreneurs are willing to obtain from the market also needs to be realistic.
To impress your investors and to get investments from them – you must have realistic stats and pragmatic approach about your product and strategy. Vaguely presenting your stats to investors is a big turn off and they are just not going to buy your idea.
How much Revenue will your product earn in present and in future?
The ugly truth of today’s time is that creation of business is pretty easy but establishment of a long term business with sustainable solution is very very difficult. A business which calls for lumpsum investments from investors needs to have a clear vision, approach, tactics and long term planning. This area of consideration requires not only how an entrepreneur is going to earn revenue from their product but also needs to pay heed to the fact that how they will plan the long-term growth of the product..
Will your product be sold at a full price down payment or will it be subscription based – an entrepreneur should always be prepared to answer these questions. If an entrepreneur’s approaches its investor with a full proof plan, then only the chances are high enough that an investor will buy your idea. If you don’t have the plan ready for next 10 years, at least you need to show some confidence in your idea.
What are your obstacles in your target market?
An entrepreneur should learn about the possible barriers of their competitors and the hurdles they is going to face as a new market entrant. It is good to be prepared beforehand and to be defensive. Even though your strategy or product would be really good, but it needs to have that ‘X-Factor’ that makes it worth the purchase. Your idea has to be very protected, as an investor would not like to put their money on something that would fail to defend itself.
How to execute your idea?
Execution is the only matter of interest to investors once they are updated with realistic market size. An entrepreneur has to have a proactive team that can execute their idea with ease and create some value for their brand.
For this even if an entrepreneur has to build a minimum viable product for the sake of acqui0ring new customers and retaining the existing ones, they should do it.
As for investors this MVP will be a sustainable long term approach for getting their money out. An entrepreneur should extol their knowledge, skills and experience and those of their team.
How to enable Investors achieve Liquidity?
Investors are not going to wait for their lifetime to get the desired return on their money. The entrepreneurs however, get into business with the view of making it sustainable and to make it run long enough. No investor has this much patience and time. If an entrepreneur is looking out for investment capital, then they should be prepared to deal with the reality that within the time span of next 5 or 10 years either they would have to sell their company or ask other investors to join in. The possible solutions for this are – merger, acquisition, or initial public offering.
An Entrepreneur should not build a product just with the aim of making money and getting huge returns. Investors in today’s time are very conscious about putting their money in a product that will be beneficial to public and mankind. Knowing your company and product inside out is one of the positive attributes that every investor appreciates. If you managed to lay positive impression on an investor, then their decision of investment in your idea may be doubtful but they will be quite impressed with your insight about product and will definitely be willing to help you.