Monday, November 18, 2013

What Investors Need

As I previously discussed in my last blog post about what investors want to see in a business plan. I have decided to discuss the finance section of my business plan I am going to improve. Part of my business plan is made for college courses that I am currently taking. There are some requirements I need to meet that won’t exactly be what I need for the real world. So some minor changes will need to be done.

Some of the material such as giving the investors information on what I have already done and what is already invested should be a pretty simple task. I will need to prove that I have money invested and not just say I have invested. I will have to prepare a list of receipts and provide photos or links to show the current studio and marketing efforts. What all this does is show the investor that I am putting up risk myself.

As far as what the money would be used for is different than how most banks would want you to spend the money. They typically don’t want you to purchase buildings because if your business faults they are stuck with trying to sell it. They are a bank and not a realtor company that wants the extra hassle of selling property. This is why I would seek a private investor, because renting is not really in the best interest of the new business owner. If a new business owner buys a property and their business fails, it may take some time but the investor losses a lot less buy sell the property that was invested in. Also buying the property means that the company has less overhead, which allows for slow times to hurt less. That means you can make less money because your expenses will be lower.

Demographics, marketing analysis, and who your competitors are, is very important to anyone ready to invest in your business. I prefer to make my competitors allies. This reduces the chances of getting crushed and being put out of business permanently. We are located in Nashville where the major record labors are located and many people come to the area in search of being in the music business. As investors know this, it can be a huge part of your business effort. It can be easing to know that your demographics are up to par. Being in Nashville also helps the marketing efforts by being where the music is.  

Being honest in your financials is important. If you have losses you should report them. What that shows is how you have lost and went from being down to profiting or reducing those losses. Showing that you know how to handle losses and struggles show that you understand business and what it takes to survive. Knowing that you can achieve those profits down the road will ensure the trust of the investor. Not only should you share all this information but making it clear and easy for them to ready and understand is important as well.

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