Three Reasons Why You Need Investors

If you want to be an entrepreneur, there may be one skill above all others that you need to have or need to learn: Sales. Even if you’re the best at what you do other people don’t know that and that’s where your ability as a salesperson goes to work. The late Steve Jobs was arguably the best at what he did but he also possessed the art of pitching a product and bringing people on board.

An entrepreneur not only has to sell to his/her customers but also to investors and that, according to business coaches, is one of the most feared tasks reported by future or current entrepreneurs. Although some attempt to fund their own startup, for more capital intensive businesses, that is often not possible. Even if you are able to fund your business on your own, there are some reasons why that may not be the best idea.

Diversify

An entrepreneur quickly becomes an investor regardless of their investing experience and part of investing is diversification. You cannot commit 100% of your retirement savings to the opening of your business and you can’t use all of the equity in your home either. By spreading the potential liability out to other investors, you don’t have to put your entire financial net worth at risk.

Not Just Money

When you find venture capitalists, angel investors, or other funding sources, they know that it would be ill advised of them to write you a check and collect payments. They are more likely to make money if they partner with you. By bringing their experience and strengths to the business, they make up for experiences you don’t yet have. Not only do you gain funding, but you gain experienced partners.

Negotiators

If you think turning on your salesman charm is difficult when you’re pitching investors, you’ll really hate negotiating with people who want to purchase your company later on. Like going to a dealership to purchase a car, they know far more about buying a company than you know about selling one so you better come armed with help. Those venture capitalists who have bought and sold companies all of their life couldn’t be a better choice. Since you’re negotiating their profit, they’ll be more than happy to give you a hand.

Bottom Line

Even if you don’t need the money, investors offer more than just financial backing. They come with expertise that can make your business successful long after they leave. Practice your sales pitch and set up with some meetings. Businesses most often fail because of underfunding. Don’t let yours be the next.