The opportunity for an entrepreneur to interview an investor is an honor for the entrepreneur, because the process of obtaining capital is extremely competitive. It is important to remember that an entrepreneur is encouraged to build, step by step, in a simple way, his own vision. Too many or too few can often lead to confused and disinterested perceptions.
In addition, verbal presentation should be repeatedly practiced in front of colleagues or the team, as each comment will greatly improve verbal skills and will force the upgrading of arguments. The practice of exposure to an audience is important because lessons can be learned from the feedback received. Unfortunately, the exposure can not be done by the spokesperson or the marketing director, but only by the entrepreneur.
While some entrepreneurs can do this easily, others can simply live anxiety, answering questions posed with hesitation and doubt. Every new homeowner looking for capital needs to prepare properly for the moment he will meet with investors to avoid rejecting and missing the interview.
Here are some questions the entrepreneur can face:
1. Tell us about you and your company.
The entrepreneur should provide a brief introduction about himself / herself, including letters of accreditation and education and education papers, as well as other pertinent basic information. A general idea of the company should then be mentioned, followed by the company’s objectives, as well as different products and services offered.
2. Who are your major competitors and what exactly do your products and services do?
Entrepreneurs must be prepared to mention any competition on the market and how their products and business services will offer competitive advantages. Because market competition can be extremely robust and dynamic, it is always a good idea to provide concrete examples.
3. Who are your target customers and how did they respond to your prototype?
Investors are always curious when it comes to demographic information, including the target market and consumer base for new products. By creating a prototype exposed to the public, the entrepreneur can refine this prototype based on customer feedback. It may be that a real product needs more “revisions” and “upgrades” before it is mass produced. Therefore, it will be wise for the entrepreneur to question potential customers about business details.
4. What is the marketing strategy for the proposed products and services?
Business promotion will be addressed through advertisements, internet marketing and promotions, as well as public relations, to increase sales and gain competitive advantage. Placing a new product on the market can be quite costly and it is therefore extremely important for the entrepreneur to evaluate and include this estimated cost in the financial plan.
5. How much capital do you want and how will it be used?
It is always a good idea for entrepreneurs to give an accurate estimate of the amount of capital they need. By presenting a plan with financial accounts and forecasts, the entrepreneur will gain credibility (eg rent, utilities, technologies, salaries, etc.).
6. How long does it take to start earning?
This principle refers to the amount of time needed for anticipated cash flow to occur. Usually it will take an average of one year, or more, so that any new business will reach revenue; therefore, it is important for the entrepreneur to consider all possible expenses before determining the amount requested.
7. What is my stake as an investor in the company and the return on my investment?
Because each potential investor wants to have an idea about his stake, such as the percentage in a company and the rate of return, it is essential that these figures be presented and negotiated. Investors often expect a certain percentage of ownership in a company with a high return on investment due to the risk associated with the fate of new businesses. Entrepreneurs should be aware of such requests and be prepared to present these values.
8. What will happen next if the company fails?
Investors are famous for risky business addiction and often have a well-planned exit strategy for each of their investments. There is, however, the possibility that a company they invested in is not as successful as its plans, so they prepare a strategic plan according to their interests. They can choose to leave the company after a certain period of time through IPO, merger, acquisition you or through the sale. The contractor can even provide investors with some protection by providing assets and subordinating equity in potential future liquidation.