No investors want to put their money in any venture without doing some research. This move helps them to determine if they are risking their money. The answer may be no or yes based on various reasons. However, investors are advised to do a thorough investigation and remove any doubts upon the target company before investing. Come up with the right questions that will help you clear your doubts.
What is Their Business Plan?
A business plan is a document that shows the business’s mission and how you intend to grow it. Check how the company’s management has expressed their knowledge, passion, and dedication to its growth. The plan must convince you that they understand their target customers’ needs and know how to market their services or products. The business plan should have a clear product description and indicate how it will stand above those in the market. Check how the business intends to deliver its products to the customers. Which means of transportation are they planning to use? In the world today, 95% of cargo is transported by ship, and due to higher cost, it also makes sense to move goods in high volume ships.
Which are the Possible Threats to the Business?
Check the potential risks that may face the business and the management measures to reduce or prevent them. Ask if the company can take legal, regulatory, and technology risks if they occur. A business that demonstrates that it can eliminate or reduce such risks is worth investing in for a long-term basis.
How Exactly Will They Use Your Investment?
The business’s management team should come out clearly and explain how they’ll use your money and get returns in their development plan. Whether in marketing, adding stock, human resources, and other activities, they should account for every penny. For instance, the U.S Department of Agriculture invested about $85 million in 2015. The ministry used that money to improve internet connectivity all over rural areas of the United States. The stakeholders had to indicate how they’d use all the funds to benefit the rural dwellers for the investor to fund the project.
Are the Business Founders Determined and Enthusiastic?
Check if the founders have the drive to grow a successful business and if they are ready to face the challenges along the way. They should show that they understand the industry and can utilize the few resources at their disposal to get a more significant outcome. A person who exhibits some passion and is willing to overcome the startup challenges is a great motivation to the investors. Are other members of staff involved with the business idea? If only a few staff members are vouching for the business idea, that may be a red flag. You need assurance that staff exhibiting low morale will catch up with time. Investigate and ensure all the directors get along well. Directors who work together are likely to solve issues quickly. On the other hand, conflicting directors engage in unhealthy arguments and may not conclude matters.
What is Their Marketing Strategy?
A company can use various marketing strategies to reach its potential clients, such as content marketing, advertisement through radios and television or banners, etc. Technology has evolved, and many businesses are using the internet to market their products and services. Content marketing strategies receive three times per dollar used than paid search, and it’s vital to concentrate on such efforts. Check if the marketing strategy used will target the potential clients and what are its pros and cons.
Lastly, it is necessary to meet the managing directors and have a one-on-one talk about getting valuable information. How they answer various questions will tell if they have a hidden agenda. A meeting will bring you closer and create a bond with the management since both sides will be satisfied with the discussion. Ask the right questions to prompt the management team to discuss their spending and propose how they’ll work towards meeting their goals.
