Investing in Relationships: Building Connections as an Entrepreneur
By: Meredith Flory
There comes a point in most small business owners’ journey where they have a clear idea or plan for a successful business decision, but they lack the capital. Sometimes the clearest plan of action is to obtain a small business loan or work toward accruing savings, but other times finding investors might be a possible way forward. However, asking for money is almost always an awkward and uncomfortable experience. There are some etiquette rules and paths toward forging connections that can make the experience better. The following are three ways to build a foundation to attract investors to support your business.
- Build business relationships. Any small business owner or entrepreneur needs to develop a network of relationships in the community: people ahead of you in business who can act as mentors, friendships with other small business owners, and community leaders to grow your opportunities for partnerships. You can start building these relationships at any point in the business ownership process—even with just an idea. Join a local leadership cohort, business course, or meeting series. Volunteer with a nonprofit organization that pairs community leaders with volunteer opportunities. And if you are already in business, make sure to grow your relationships with authenticity and respect. Any of these avenues might lead to introductions with possible investors and demonstrate that you are an enjoyable and trustworthy person to work with.
- Have a clear plan. A great idea is only the first step to starting or growing a business. To move forward, and to interest investors, you need a clear plan. Possible investors need clear points about your big idea. You must be able to present clearly what you need: Is this ask for product development, staffing, or operating space and budget? You need to be prepared to explain the specific numbers of what you need and the possible return on investment. While things might change as you progress, estimates for the projected timeline, milestones, and applications of funding are essential parts of the ask. A summary of research you’ve done, explaining the niche you are fulfilling, possible risks, and ways to market and sell your product, can prepare you ahead of time to answer investor questions. Need support? Powerhouse Planning can help with your planning with our business growth.
- Seek advice over money. With investors comes a possible sharing of control, yes. But investors also offer the opportunity for guidance from more experienced entrepreneurs and people in your field. When you are first starting out, or you’re at a crossroads in your small business, consider asking those with more experience or success for advice rather than money. Ask for a meeting to go over your business plan, or work toward developing a mentorship relationship with someone in entrepreneurship whom you admire. Share your idea, plan, or problem and ask for advice on a way forward. They may give you advice that doesn’t feel helpful, but they might also identify a way to be supportive as a business partner, a contract worker for a particular skill set, or connections to possible investors. Perhaps they even may be interested in investing themselves.
Focusing on relationships and building a solid foundation first will help you attract investors at the point you need them and set yourself up as a competent and resourceful person to work with.
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