Of all the challenges entrepreneurs face especially in Nigeria, lack of capital is the most pressing.
Many people have said, and rightfully so, that lack of capital is not a strong enough reason to stop any serious entrepreneur but the sad truth is, every business needs money to grow. You can run lean, you can run on a shoestring budget, but you still need money, no matter how little, to run a profitable business.
So here are 3 reasons you find it difficult to attract willing investors to your business
1. You don’t have a business yet
I will start with this because it is the most common mistake I see beginners make when they think of starting a business. They come up with an idea and they start looking for where to find investors to buy the idea.
It would be nice if we could all find investors for our various ideas but the reality is, investors invest in businesses not ideas. An idea, no matter how genius, is still what it is – an idea. I tell people all the time, there is no good idea or bad idea. You only have good results and bad results.
Now, for investors to pick interest in your business idea, they have to see, at the very least, the results showing that such idea is practical. The only way to show such results is to turn your idea into a business. You need to register the business and get it running even on a small scale.
This will not only show your seriousness and determination to succeed, which in itself is a big plus, it will also show you all the loopholes in your idea and allow you get valuable experience in running the business so that when you get investors’ money, you will know what to do with it.
True, some ideas are so brilliant that an investor could choose to run with them from day one but these are not just off-the-block business ideas you hear every now and then. They are seriously, potentially huge ideas. This is the reason only one in maybe 50 business ideas ever get investors’ attention.
2. Lack of a solid business feasibility plan
Again, this is a serious error.
Many of the business plans most business starters write are just conjectures and speculations without real facts and numbers. This is because most of them have no real experience running the business, because they have not started the business in the first place.
Investors are not angels, they are business people who want their money back with some profit. Any business person can take one look at your business plan data and know if you have any experience in the business or not.
I have seen many business plans and I can tell you, the difference between a business plan written by a starter and one written by an experienced business owner is like the difference between night and day. You cannot fake or copy experience.
Where am I going with this?
To have a solid business, you must have some experience in the industry you are about to enter. If you have no experience, turn the idea into a business, start and run it for a while. Use any means available to you to test-run the business before you ask an investor to come take a look.
3. You are showing the wrong business to the wrong investors
The first step in finding an investor is knowing who to approach, after you have worked on your business idea and such. You need to know which kind of person might be interested in what kind of business.
So if you want to start a poultry farm, for example, Freddie is not the person you should be talking to. But if you have an innovative technology that could potentially change the way poultry farming works in Africa, even the world, then you should talk to him. You see the difference?
Before you meet anyone, do your homework and see if that person could be interested in your idea.