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WHAT DO INVESTORS LOOK FOR IN A BUSINESS-

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WHAT DO INVESTORS LOOK FOR IN A BUSINESS- Powered By Docstoc
					?It sounds obvious, but if you want to attract an investor to your business you need to
know what they're looking for. With so many people vying for an investors' attention
you really need to make your business, and its potential, stand out from the crowd.

The first, and probably most important, thing that investors look for in a business is
the potential for growth. Growth means profit, and profit means a higher rate of return
on their investment. If a business hasn't got potential then an investor won't look twice
at it.

Going hand-in-hand with this is the need for a sound product. If the product isn't good
then there's no potential there for growth, and nothing for investors to be attracted to.
Equally, they need to be interested in the product or services that you'll be offering - a
good tip is to look for private investors that specialise in the area you want to occupy.
That way, they'll be more likely to invest as they already have a personal interest in
the field.

Investors also want to see a sound business plan with an excellent understanding of
finances and the market as a whole. They need to be able to trust the people that
they're investing in, and if they don't have confidence in you and your abilities to run
the company well then they won't be parting with their money.

A business needs to be realistic, with a good valuation and a clear strategy of how it's
going to progress. Making an unrealistic valuation, and in turn asking for an
unrealistic investment, will only convince investors that you don't know the business
market well enough for them to invest.

You need to be able to offer an appealing share of the business at a good price, and
should show an investor that a clear exit strategy is in place for them to be able to reap
their returns. This demonstrates not only your ability to think ahead, but your
confidence in the business and its finance as a whole.

Investors consider a huge array of factors when looking to invest in a business. As
long as you plan ahead and can offer what they're looking for, you stand a good
chance of being able to raise capital in this way.

				
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posted:4/23/2011
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