5 Steps to Build a Strong Entrepreneur and Investor Relationship
Not all investors are willing to get involved in an entrepreneur’s business, but then it is important that as an entrepreneur you build a strong relationship with your investor.
Building a strong founder/investor relationship will make investors gain confidence and lead to strong returns on investment. Though they both have different responsibilities, their sole aim is to make a profit and to birth a successful business.
Investors invest their money in a business to make a profit, and entrepreneurs invest a new idea or business plan and time to get a business up and running. Building a relationship with your investor is one of the many criteria to gain more brand benefits and success and be more advantaged.
How to choose your investors wisely
Warren Buffet once said, “We spend a long time understanding the entrepreneur’s business and assessing inefficiencies and risks, not only so we can price them, but so we can deploy assets to fix areas that need attention.”
Here is a sincere investor who is not just into paying bills or investing alone but also has a heart for the business. Investors like this reveal knowledge n how to build a business and help entrepreneurs develop.
Find an investor who is very interested in you and believes in you, your product and your team. They should agree with the vision and mission of the business.[forminator_form id="101630"]
Ask certain questions like the process they would follow in supporting your business and how they price. Get to know their investment philosophy and approach and see if you have the same or different values or methods.
Do the research and know your potential investor’s reputational red flags, If there be any. It may come back to embarrass or torture you in the future.
An investor with a respectable reputation can promote growth through industry connections and business opportunities. How can you build a strong relationship with an investor as an entrepreneur? Here is how.
Anticipate Instead of React
Anticipate, by definition, means to give advance thought, discussion, or treatment to something. It has to do with your expectations of what the future holds. It means that,how to before starting your business as an entrepreneur, you must have done critical thinking and drawn out or written down a business plan on which to focus.
Once you get involved in a new business, instead of reacting immediately, anticipate. When you anticipate, you create a meaningful business plan with which your investors can relate.
You should know that you lose full control of strategic decisions once you have an investor. That means you should create awareness and let your investor know about everything. Even when you operate sole proprietorships, you must involve your investor in the business’s decision-making.
Creating and putting together a solid business plan raises your investor’s expectations and keeps you focused on achieving set-down plans. That doesn’t mean your ideas are not valid or allowed. Innovate and invest. You own the business, so you should see that you do everything possible to make things work out well.
And as you do this, do not neglect one of the most important factors of building a relationship with your investor; communicate your thoughts, and keep them informed and engaged by providing frequent and thorough updates.
Balance Your Priorities
Balancing your priorities is the ultimate key to the heart of investors. When they realize that your priorities are balanced, their confidence is even more boosted, and their love for you will grow.
One of the most critical things an investor looks out for is profit. Before investing in new businesses, they determine if that business is worth it.
When you start your business, making a profit should be one of your priorities. However, that shouldn’t make innovation less prioritized. Entrepreneurs are tasked with creating new business ideas. Your investors should be able to discern what you have to offer and how you are willing to make it happen.
Innovations generate profit, assist the community and accomplish company goals. It helps your business improve and stay ahead in the market competition. When your business is ahead, you can imagine how profitable your business will become.
To build a long-lasting relationship with your investor, you need to bring in new ideas that would sell and generate profit. Innovatively advertise products or services to potential customers and potential clients.
Have it at the back of your mind that investors’ trust is strengthened when you fully embrace innovation. He has no doubt in him about you or the business. It would help if you prioritized improvement too. Try your best to improve your work and give room for growth until you are best at it.
No matter how small a business is, small business owners must balance their priorities to enable their business to grow. So, even though you are a small business owner or your business has grown, you must own every part of your business and manage little tasks.
On your entrepreneurship journey, several things will appear important to you. It is now left to you as an entrepreneur to determine what is truly important from what appears to be.
After taking note of the important things in your professional and personal life, prioritizing them is the next line of action. To make a balance, be clear about your priorities, make SMART goals, optimize your productivity, and be organized.
Diligence is a vital tool that an investor looks up to in an entrepreneur. An investor wants you to show care and constantly improve the business or financial institutions. An investor wouldn’t bother investing their finances or sending money into the business bank account when they realize you are not diligent. They would see it as a waste of resources.
Since you have successfully won their heart through your diligence and they’ve been able to entrust their funds with you, they expect you to continue in the act. It should be a consistent effort to ensure the business produces substantial profit.
One big mistake that an entrepreneur can make is not being honest with investors. Deceit ruins relationships. Your investor should be able to vouch for you in every way. Open up and show your sincerity in conversations and in doing. Don’t say a thing and do another nor do a thing and say another.
Inculcating such habits will make your investor gradually lose trust in you. So, if you’re working together and want to build a good relationship with your investment, you must be on the same side.
Be open; let your investors know everything without hiding anything from them. It is essential, and that means transparency and communication are required. Keep them up to date and seek their advice often. Even if things are not going well, telling them as it is will help to build their trust in you.
It is in their interest as investors to know and understand what is going on with your company – the good news, of course, but more importantly, the demanding situations and setbacks.
Being honest about the company’s product, growth, and the market goes a long way in establishing trust. So, make sure you always have honest conversations with your investor.
Know When to Walk Away
As you start your business, there can be some uncertainty which can make you skeptical about it. Even the easiest business gets tough when there isn’t sufficient and consistent cash flow, and frustration might set in.
You might need to walk away to keep your business running and keep your relationship intact with your investor. It is a very difficult thing to do, but you’ll have to do it.
It requires maturity and a clear vision of the greater things ahead. Though we are in a world where quitters are in belittlement, you’re not a quitter if you’ve run out of ideas, approaches, plans, or directions. It might even be that the basic concept is just unworkable.
You might have to give it all up if your investor is willing to take over. Succeeding sometimes means letting go of your recent dreams to make room for others.
Succeeding in your startup also means you must cherish founder/investor relationships, which are crucial to your business’s progress. Often, these relationships begin with much enthusiasm and hope for the future, only to have complications over time.
Investors are in the relationship business, not in the transactional business. And this means that you, as an entrepreneur, should look at each investor as a relationship you will nurture over time.
Building a long-term relationship is necessary even if they are no longer going to invest their money. They might be available to offer their time, encouragement, and advice and might often be an outside resource you could turn to for help.
Knowing how to navigate through and develop lasting relationships with your investors is important as an entrepreneur. The tips discussed above will help to guide you.