Business Investment

Start-ups: Should you bring an investor on board?

No matter what industry you’re in, when you create a start-up business, one of the first things you’re likely to consider is whether or not to look for an investor. Bringing an investor on board can make sense, especially if you find the right organisation or individual who can take you to the next level, but sometimes this is a step too soon for small businesses, especially start-ups. Let’s say you have absolutely no start-up experience whatsoever. It’s highly unlikely you’ll get a good investment with your first try. It’s often a case of trial and error when it comes to choosing the right investor, so you may want to get some experience in the bag first.

You also have to think carefully about ownership. You are essentially selling ownership so can’t decide everything by yourself. The relationship with your investor matters a great deal, so rather than working alone you need to embrace teamwork. It’s also important to think about how scalable the investment opportunity is. If for example, doubling your sales means doubling your headcount, then some investors may be deterred and rightly so. They need to see healthy potential. There are many cases where people get the investment they need but they can’t succeed even with the funds they wanted so you do have to think carefully about where that money will be utilised but there will never been any certainty of success.

If you’re only just getting the ball rolling and there is a lot more you can do on your own with the resources available, then you should put as much time and effort into getting your business setup. It’s a sad truth that many individuals work for free 24/7 on companies where they do not hold more than a percent of the shares, so whatever you do, don’t be that person!