Small businesses that are currently looking for capital may have found that there are current opportunities available when it comes to borrowing, as some major financial institutions have vowed to continue small business lending efforts here in the middle of 2011, but there are also programs like those from the SBA that may be helpful for companies who need help growing despite being in a position where they are already established. However, there are businesses that are looking at alternative ways to gain the financing to expand their operations, and angel investors happen to be one of those resources that some companies are tapping into, but some businesses are questioning how they can attract this particular source of capital.
As with a traditional bank loan, businesses will go into a bank, present their needs for capital, how they will use a loan, and essentially try to sell a bank on why they are a safe option when it comes to making a particular small business loan, and giving a presentation to an investor is not entirely all that different. Resources like the SBA often suggest that small businesses who are looking to attract outside investors need to properly draw up a business presentation plan which should be descriptive yet concise, and of course prepared to grab any potential investor’s attention within the first minute or so of a presentation.
What typically makes small business angel investors, or any angel investors for that matter, different in terms of how a business may sell themselves versus talking to a financial institution for a loan is that many of these investors have been successful in business or in a particular businesses area, which means they will know a great deal about the sector in which a business owner plans to attempt to grow.
Obviously, if an angel investor feels that a business has potential to expand in a way that is profitable, and ultimately stay successful in this particular area, they may invest capital at different stages in the growth of a business, but also, these investors will usually take an active role in the running of a business, like sitting on the board of directors. Some business owners often shy away from angel investors simply because these men and women may want to participate in the direction a business goes, but this can often be a mistake as, once again, if a business owner does their homework properly and pitches their company to someone who was successful in their industry, they will not only gain financing that can help their company become more profitable, but they will also have the guidance of someone who has been successful and essentially has tread where they want to travel.
A word of caution that is often given though, usually centers around the business owner and who they allow to invest in their company. While businesses that are looking for capital cannot be particularly picky in some situations, a business should not put their company’s future on the line if an investor may have unreasonable demands or terms, or may not have been particularly successful in their previous business ventures. While investors can be an outside source of revenue that will greatly benefit a small business, business owners should also have their company’s best interests in mind, and make sure that they not only property plan a business presentation, but also seek out reputable investors who can help them in a manner that is beneficial to the company.