Growing Your Home Business

You have worked on your Home Business and the business has met with a certain degree of success. You feel that with extra resources (namely money), you can bring your business to a whole new level. You know that your business model is working and proven to be successful but you need more money to expand your business.

There are a few basic things that needs to be in place before you can approach a potential investor. Without any of these items in place, the investor would probably not look at you as a serious business person and thus not give their funding.

Have a comprehensive and bulletproof business plan - A business plan must be clear and provide enough detail to anyone who reads the document to understand how your business works and how your company is able to meet its business objectives. Provide the Financial Statements of your company - The financial plan is one of the components that investor pays a lot of attention to. The financial statement states the current and past income or cash flow. Be prepared to show your personal financial position and assets so that the investor has a clear view of your net worth. The investor wants to know that the founding member of the company (namely you) have a stake in the company and in the position to risk from the whole venture. The management team is completely in place. Most investors probably view this as the most important factor when deciding to fund a project. The management team should have their credentials documented and be prepared to prove that their credentials are true. You should also consider putting in the names of your legal and accounting team because this will add credibility to your project as well. You must also prepare all legal and accounting documents such as articles of incorporation, opening balance and income sheets, documentation on patents pending and other Intellectual Property documents and an initial capitalization sheet defining the founding team's stake in the business. The more details you provide, the less likely there is doubt in the investor's mind to invest in your project. Have a core board of directors working with your management team. The board should probably have at least one seat empty so that the investor or his appointee can be placed in the board. If you have already secured some deals for your product and services and the fund injection is meant to fulfill these deals, it would be a good idea to include the proof of these deals as well. It would provide the investor more confidence that his money will actually be well placed. Be prepared to demonstrate the functionality of your products and services in a scenario that is mostly used by the customer. State clearly how the investor will benefit from the whole venture. The investor is in the business for his/her own benefit - not because he/she likes you. Be prepared to discuss how the whole venture will benefit the investor. The investor is getting himself/herself into a position of risk by putting his money into your venture. At the end of the day, your job would be to clear all the doubts in the investor's head and be able to convince the investor that putting his/her money in the project would benefit him/her.

To Your Success

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