Need some unbiased input on approaching potential Investors, please
tigeress289 started this topic @ 15:21 on 06/01/2011
Hi I run a small online business which has good profit margins but has reached a point where in order to grow it needs further Investment. I have approx 3000 customers who have bought my product, some are very good repeat orders. Say I wanted to raise capital by offering them a percentage or if they like, the chance to sell the product directly if they wished. What way would you approach them?
I have thought about a mail shot setting out the amount I am looking for and an option to buy 1 or more shares of the whole figure, an example being 1 share is £100?
Or email them first outlining my intention and asking if interested email back a confirmation and then send details, also I would not want money up front untill the whole option has been taken up.So the risk is spread unless one person wants to come in.
I just find it impossible to talk to my Bank Manager about business when he was a salesman for a carphone company only a year ago and he can only go by what his computer tells him.
Investors or savers are getting nothing back on interest as the rates are so poor.
I would really welcome any input into how you can approach others to invest.
cheers
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RE: Need some unbiased input on approaching potential Investors, please
tigeress289 | 04/02/2011 08:04 AM
Hello Just thought that I might add that I was thinking of sending a letter to each of my customers outlining the idea/plan?
RE: Need some unbiased input on approaching potential Investors, please
James Smith | 04/02/2011 09:40 AM
Most small businesses invest their own cash, or that from profits made to date. End of story. If you are big enough and profitable enough the banks will take an interest in a big step up, otherwise you generally need to bootstrap it by making profits and re-investing them.
Sending out essentially "we are flat broke" letters to your customers sounds like a disaster waiting to happen. What does your accountant say about issuing all these shares? I imagine they will have something to say......and it wont be too encouraging....
Regards,
------------------------
James Smith
Chartered Accountant
www.jamesesmith.co.uk
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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT
RE: Need some unbiased input on approaching potential Investors, please
tigeress289 | 04/02/2011 09:18 PM
Hi James
Trouble is with the business, is that I do put the profits straight back and I have grown it but I have to have my products made by third parties and this really restricts growth. I really need to buy the equipment myself and be in the driving seat and also becoming a seller supplier, rather than a seller buyer.
I only use my accountant to deal with problems if they arise and this is more of a funding problem. I have an appointment next week with a lender and will see how that goes and then decide what to do from there. I just think there is an investor in my customer base but its how to find them?
cheers