Attracting investors

Investors are a key part of opening and maintaining a successful business. Let's look a little more closely at what investors do precisely and how to attract them and hang onto them.

1. Investors are people willing to put money into your idea, service, product, etc. It's not easy to get a business started; it takes a lot of time; it takes a lot of money. Really, it's very, very uncommon for a business to get started without investors, however minor they might seem. When a kid opens a lemonade stand his or her parents basically represent investors; they provide the lemonade, cups, and cardboard box, while the kid provides the energy and labor (and usually the initial idea).
2. Money is a big deal. Money ruins relationships. People are extremely cautious when they go to their friends and family to borrow money; people have a plan in place (or they should) for paying the money back; and a discussion of this plan is usually part of the borrowing and lending process. Investing, in the long run, is no different. You won't have the benefit of family ties (unless some of your investors are family, of course) with investors, which means that your trusting relationship will be in large part build purely on your preparation.
3. So, what to do when preparing to approach investors? Try to answer every potential question BEFORE you go in for the big conversation. This may take a little role-playing on your part, where you try to think of all the possible questions, objections, worries, doubts, etc. that an investor might have regarding your fledgling business. Be prepared! If you can answer whatever question your potential investor throws at you, if you can satisfactorily assuage your potential investigator's every concern, you're standing in a good place; there's a good chance you're going to get your backup.

4. Think of the basic, common sense things when it comes to attracting investors. Investors have money, and money tends to make folks a little conservative (even rock stars, if they're making an investment). This means that you'll have to come across as a competent, responsible, savvy, organized, intelligent, enthusiastic, creative, not-easily-rattled etc. sort of person. Who knows, it'll probably take some acting on your part! You'll have to be on your best behavior, in other words. A great product or service combined with a motivating, motivated businessperson is a delicious aroma that investors will smell from miles off.
5. When attracting investors, be sure to know EXACTLY what it is you're going to do with their money. EXACTLY. You don't want to hesitate for an instant or stumble for words when the potential investor asks you, "Exactly what do you need my money for?" It isn't good enough to point vaguely in a certain direction and talk in generalities and so forth. You need to be able to say, for example, "Well, ten dollars will go to buying light bulbs, ten for cold cereal, twenty for the broken television sets, thirty for the dried roses, five for the envelopes, five hundred for the dynamite," and so forth. We're being comedic (unsuccessfully), of course, but the principle stands. Try to know down to the nickel what you plan on doing with X investor's money. This will not only impress X investor, it will go a long way toward convincing him or her that you're an impressive example of the entrepreneurial spirit working at its best and brightest.
6. It's okay to be nervous when talking to investors; all of us feel nervous when it comes to attracting anything, mainly because none of us feels that attractive. So what do we do? We do the best that we can. We might not have a super model's looks, but we can bathe, clean our hair, cut our fingernails, brush our teeth, wear clean, stylish clothes, a good cologne, deodorant, etc. We can become cultured and a general joy to be around. This basic principle of human behavior and psychology applies precisely to the process of attracting and keeping investors.