… Investors are not the only people who should have the questions. Small business owners must also have a say. Not every capital investment is a good fit, for one reason or another. Sometimes, its bettr to look elsewhere for your capital, no matter how it makes your stomach churn. Here are a few questions, you must ask potential investors before accepting their money.

1. Are They a Follower or a Leader

How an investor interacts with the rest of your company has a huge impact on their value. Whether they are a leader or a follower will determine whom you should speak to when discussions come up concerning investment or the company’s direction. Knowing who prefers to go with the flow, and who prefers to with their gut is crucial. The latter have a direct hand in business development, and can help keep feelings from being hurt, and make sure those who want a say get their day.

2. How Does An Investor Make Decision?

Everyone’s got their own way of doing things. Some investors like to take their time and examine everything from a conceivable angle, while others like to go with their gut. Whatever be the case, it matters to you. How they make decisios impacts the time it takes for them to weigh in which can affect your company’s efficiency.

Keep in mind that you may not be dealing with an individiual entity. Some funds are handled by multiple persons and syndicates who have scheduled meetings to decide on their vote. This can drastically affect the amount of time between planning something and getting it done. If you feel their schedule is too inconsistent or slow for your company’s needs, its best to look elsewhere for your company.

3. What Do They Need to Know?

Depending on what stage your startup or small business is in, investors will want to know different things. For the most part, they will need to know what your future plans are, how the company is doing and what could go wrong. Others will want to know more about your core team, while others may be more motivated by the potential your company yeilds. Prepare documents detailing important information about your company, so that there is no downtime and so that they can pursure it at their comfort. You should also prepare non-disclosure agreements if they should require more sensitive information.

4. Have They Invested in Your Industry Before?

Investors have Niches. They usually invest because they have a working knowledge of the industry. They know better than first time 20-something entreprenuers who look upto start up business loans. Finding out their investment history will also tell you if they are defenitely looking for a company to give money to, or if they are researching for a future reference?

5. How Much can They Invest?

Investors don’t have all the money in the world, and so they are constantly putting money in and out of their accounts. There are investors who invest by writing a cheque for their portfolios every week. Depending on when you catch them, you may find that they are not ready or able to commit to capital to your small business.

This can drastically impact your fundraising efforts, if you happen to with those who don’t have enough cash you need. Don’t worry about being socially akward to ask them how much they can put down. It is perfectly valid concern, and considering your startup or small business needs, it can also save you a lot of time, if they don’t have enough reach.

Although it doesn’t hurt to give them a rundown of what your company has to offer, just in case their funds suddenly free up. Asking investors these questions will ensure that you only get people who are great fit for your small business. Don’t be afraid to ask others the questions. Investment is sort of bonding.

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