Tuesday, April 5, 2011
Should I Get an Investor or Not? (Thoughts of An Entrepreneurial R.E.B.E.L. Volume 22)
Enlisting the assistance of investors is very tricky business, especially for novice entrepreneurs. I believe that it puts added pressure on new business innovators that is unneeded. Investors can quickly turn into vultures if your company has not taken the necessary precautions to limit this from happening. It is much better to make mistakes on your own dime rather than some elses. A good rule of thumb is to prove to potential investors that your company can generate a consistent profit before you start asking for outside capital. As a matter of fact, you won't even have to go looking for investors if you have a hot business that is raking in nice sums of dough. That is the best position to be in, when investors are flocking to you rather than the other way around. Piece together the little financial scraps that you can and test a small offering in the market to see if you indeed even have a market. Reinvest any profits that you make back into your company and push more product until you have a substantial/sustainable business model (business model=way to make money). You'll have a much clearer perception if an investor is needed or not when your company is in the black. If you choose to fore go any of the advice just given, I recommend that you only opt to use the capital of angel investors. Angel investors are not allowed (nor do they desire) to snoop around your business decisions and have little to no say so in the moves you decide to make.