Most people assume that capital is the most important factor to consider when starting a business. Therefore, they concentrate on getting investors, first, before launching a venture. This approach is wrong because investors concentrate more on a business that has guaranteed returns. An entrepreneur should look for investors only after launching a business idea because capitalists often rely on hard data, want a lucrative business plan, value unique ideas, focus on a ready venture, and look for a clear structure before putting in their capital.
- Investors rely on hard data. The main reason why investors put their capital on an idea is to maximize returns on their investment. This fact means that they rely of specific data to make their investment decisions. An already launched idea is a good starting point for an investor because the progress can be seen from the available data. Moreover, initial information, such as sales, expenses, and expected profits, are already available in an operational business. Besides, an idea that has not been launched only relies on forecasts, which are not hard data. Therefore, it is vital to launch an idea, first, before inviting investors.
- Investors want a lucrative business plan. Investment decisions rely on a number of facts. These facts should be communicated using a business plan. The plan should also show the investor where they are investing, why they should put in capital, and what to expect within a specified period. After launching an idea, the where, why, what, and when questions are already answered since the business will be in operation. At this stage, the only value that the investor adds is to improve the operational capacity and effectiveness of the venture. This fact implies that a lucrative business plan is one that is already operational.
- Investors value unique ideas. A business is meant to cater for the needs of a target market. Therefore, a good business idea is one that has unique ways of meeting the needs and preferences of the target market. An idea can also be considered unique of it has run the test of time. This fact means that a business can be considered unique if it is already operational and is solving a given problem better that what is available in the market. Such ideas can attract investors because their uniqueness can clearly be seen by the concerned stakeholders.
- Investors focus on a ready venture. A ready venture is one that has already taken off. Besides, it is difficult to estimate the returns from a venture at the idea phase. The forecasts that entrepreneurs give before launching a venture are also normally biased because they concentrate on making profits. However, an already launched idea will show various important facts, such as the response of the market and prevailing challenges. Such ideas will give a true representation of the status of the business in terms of expected profits or losses. Therefore, it is vital to launch a business idea, first, in order to attract investors.
- Investors look for a clear structure. Any business should have a clear structure how it is going to operate. An already launched business idea is one that is in operation, which means that there is a clear structure on how things are done. Such a structure makes it easy for investors to make decisions since everything is transparent. Therefore, it is better to come up with operational structures, first, by launching a business, then inviting investors when there is need.
Investment decisions are normally challenging to make. However, it is better to look for investors for an idea after launching it because an already running business has hard data and a lucrative business plan. Launching a business idea, first, before inviting investors is also vital because capitalists value unique ideas, look for a ready venture, and focus on a clear structure.