Do You Really Need Investors?

     Time and again,  we have been lectured on the importance of investors in our business. Time and again,  we have told ourselves that our businesses will do better with outside investment.  Time and again,  we have overemphasized the importance of outside investment. For instance,  we are in a period where most of marketing can actually be done on social media and it won't be cost intensive.

  Don't get me wrong there comes a time when outside investment becomes a necessity. The question here is,  is your business at that stage yet?

Photo credit: foxcitiesregionalnews.com

   
In this post,  you'll be made to see the wrong and right reasons to seek investors and to know if your business is at that 'investment needing' stage yet.
I will start out with the wrong reasons.

You are scared to risk your own money :

To be honest,  if this is your reason for seeking investment,  entrepreneurship really is not for you.  I mean,  if you can't get yourself to believe in your idea,  how do you intend to get investors to believe in it. Your commitment to the enterprise becomes questionable,  and if you insist you have no financial resources or savings,  your financial intelligence also comes into question.

You want to start with state of the art infrastructure

Quit kidding yourself,  you are a start-up. Investors will not put their hard earned money at risk just to give you a plush office.  They are investing to get return on investment.  Their investment only brings profit if you are providing marketable value.  A product or service defines the brand, not the infrastructure.

The need to start BIG

In truth,  you really don't need to start big.  They say charity begins at home.  If you are going to start,  start from your immediate environment and watch out for reactions.  You don't want to have a defective product in a large market,  and pay the cost of correction ( except you plan to crash and burn) . Start small, grow big.

Staff hire

Start-ups grow better with committed co-founders who are more interested in sharing equity and revenue than collecting salary.
The success or failure of start-ups depend almost solely on the commitment of the individuals involved.

However,  once you have found a proven business model,  with real life customers and real life revenue, not just predicted estimates,  you may now seek for investments to grow your business,  for actual marketing,  and to pay additional  staff that will be inevitably be needed.

You also have the green light to search for investors if your proven business model requires equipment that may be too expensive for you to fund the purchase of.  There are processes that are not just time intensive,  but cost intensive as well,  looking for investors may just be an option in the funding of these processes.  Alternatively,  you can partner with the vendors of this equipment or a potential big customer and dangle the words 'equity' and 'royalty' before them.

What an investor brings includes but is not limited to just the cash.  You may be needing management expertise and expert advice.  If there is credibility and  success attached to the name of an investor,  It definitely wouldn't be a bad idea to associate yourself with that investor.  Success is contagious, you may just catch the bug.