Ambitious entrepreneurs put their heart and soul into their business. They scour every location for potential investors and research every decision. While their excitement and ambition know no boundaries, entrepreneurs are still strapped for cash. In order to fulfill their dreams, entrepreneurs need outside investment in the modern world now more than ever.
Before investors give up their cash, however, they have several questions. An entrepreneur must be prepared for the queries that might come their way. With the right answers, they might attract investment to make their start-up a reality. Below are few of the expected questions an entrepreneur may face:
1. What Is The Purpose Of The Product?
An entrepreneur commonly starts out with little else other than an idea. This is what he has to sell to potential investors. Investors would most likely ask what need that products fulfill or what problem it fixes.
Entrepreneurs need to answer these questions in detail; not just for investors, but for their venture’s future. It might be that the need they are considering may not exist for everyone. In order to do away with these sorts of wrong assumptions, market research is essential.
Surveys through sites like ‘SurveyMonkey’ are helpful in construing just what the market needs can provide content on such subjects as well). Professional market analysts may also come in useful at this point. This way, entrepreneurs can reduce personal bias in the results they would show their investors.
2. What Is The Size And Type Of The Targeted Market?
A target market consists of many elements; age, demographic, geographical location, etc. Investors need to understand what market an entrepreneur is going into before they invest a single penny. This is in order to make sure that a particular market is not saturated or monopolized, making things difficult for startups.
Additionally, it is best if entrepreneurs look to conquer niche markets. Such markets are usually in the need of new vendors or service providers. However, the return on such a market needs to be substantial in order to justify the investors’ interest.
3. How Much Revenue And Profit?
This is probably the most central question of all. Investors want to make money on their investments. Hence, and entrepreneur should be prepared to answer questions about the expected future of the business. The prediction of future revenues and profits is also an essential factor.
This question has more meaning than a simple monetary interest. Future revenues and prediction are important because they give an assurance that the company would last. Anyone can start a venture, but it takes time, effort, and market interest to make it a proper business.
Entrepreneurs thus need to present their vision and plans to investors. This is in addition to data and information on how they plan to handle the expected growth.
4. How Will You Stop Your Competitors?
Entering a new market obviously poses several threats and hurdles. These are not just monetary, but also include the existing and potential competitors in the market. A business should have a plan on how to fend off its competitors from making the same product as you. For example, the service provided by Uber is now mimicked by several other companies.
Entrepreneurs thus should be able to have a concrete plan to make their product or service unique and indispensable. This might be achieved by getting a different packaging (such as Nutella jars) or providing unparalleled services even at a loss. These plans should be in place in order to answer investors’ questions in this area.
Before meeting with possible investors, entrepreneurs need to do their homework thoroughly. Market research, forward planning, and innovative thinking is the name of the game when one tries to get their company financed. Hence, company owners should take proper care to find out which questions are most asked by investors, and seek to answer them. This may give them a lot of insight into their venture as well.