HomeOpinion & AnalysisGoing down the investor aisle

Going down the investor aisle

-

STARTING up a business is no stroll in the park. It is a venture that requires seriousness on the part of the entrepreneur and the right kind of capital.

Given the current economic conditions in the country, entrepreneurs find it difficult to start business single-handedly. Given this scenario, entrepreneurs may have to go the investor route. Just like it is not easy to find a good person to walk down the aisle with, it is not easy to woo an investor.

Quality is critical in both instances. Trust is also not a trait that comes easy in any relationship; it is something that needs to be worked on for the relationship to work.

It is less easy to woo an investor at the beginning of a business than when it has started and potential investors begin to see its potential.

Given these hurdles in securing funding most entrepreneurs will then go ahead and launch the business.

This is often risky because then the business starts on a bad note and obtains a bad reputation for itself as it fails to offer the client its promise.

In my opinion, locking in a reliable source of start-up capital is fundamental to the business’ chances of success. The problem with getting investors is that they may be tentative in nature.

These types of investors will often renege on promised funding and if and when the going gets tough or things do not happen as quickly as they had hoped.

This can cause strain and cause the business to collapse. Such investors often think that their investment will miraculously bring return overnight. Any business person will tell you that returns are never instant in a proper business setup. It may take months and in some instances years before the return is recorded and enjoyed.

My advice for starting up a business for Entrepreneurs is to start small and work towards growing that particular entity with time.
Expansion may off course be slower this way, but the business retains its credibility.

If however an investor is inevitable it is important that such an investor be evaluated well.

When an entrepreneur is evaluating a proposed investor they should not focus solely on the capital needed to kick start the business.

Consider if your potential investor or group will give the business the space and time to build a solid business.

The entrepreneur should bear in mind that a dictatorial financial partner can quickly suck the spirit and enthusiasm of a new enterprise often draining the spark that prompted the entrepreneur to launch the project.

Normally it is this spark that sets the entrepreneur apart from the competitors.

The business turns out best when investors take a minority stake in a venture and provide capital and support but otherwise leave the entrepreneurs to run the business and hire relevant support staff.

Normally these would be people who have the industry knowledge, the local expertise and the passion and commitment to make it all work.

Just like the entrepreneur needs the freedom to build the company according to his vision, the relevant support staff will need the freedom to develop their own areas according to the requirements of the business clientele or customers.

Whether or not staff will have this independence which is integral to the business’s future success depends on the entrepreneur’s choice of final partner.

Essentially a partner who brings in capital is very useful, but strategic partner who can also provide the entrepreneurs and his team with the space, time and freedom needed to build the business is a true friend, one who is much more likely to start the test of time.

I am an entrepreneur myself so I know exactly what I am talking about. I hope that this article will therefore guide all entrepreneurs on their choice of investors.

I must take a moment to thank Theo Marimira for typing all articles for me.

Your help is greatly appreciated my son. Till next week keep reading the red publication and remain Brand Savvy.

Recent Posts

Stories you will enjoy

Recommended reading