Money is what keeps any business going. At some point, almost every business seeks outside assistance in order to keep their organization thriving. Whether it be a $20 million venture capital or $1, there are a few simple yet extremely important steps that need to be taken before even beginning to think about approaching investors for any amount of money.

1. Build and/or Clean Up Your Credit

If your business is new, you may not have your own credit history yet. But backers need tangible proof that they can trust you to be responsible with money and that you are able to pay off your debts easily. The truth is in your financial history. Besides doing this for a potential investor, it is good to know this information for yourself. Financiers and stockholders are going to inspect your accounts closely, as should you. Know that you are in a position to be taking money and be confident in your previous borrowing patterns to the point at which you feel confident being able to repeat that good habit.

Any sort of late payments and poor credit scores (anything below a 680) are immediate red flags. But don’t just pay attention to the money going out and how you pay it off. Look at what is coming in, and what you have had in your cash flow for the past year in order to prove that you have a healthy and steady cash income.

2. Convey a Sense of Strength

Any strong business person is highly ambitious with their business plan. But is your entire team aware and on board for this? Be sure of it before going in to any investor meetings. Is everyone confident that your team will have the ability to pay back your loan or to generate a profit for your investors? Remember not to be blinded by a sense of ambition. Positivity and ambitious business plans are important, but be sure all your team is on board with your plan and agrees with you.

If you are able to do this, you will present a united front that is extremely strong to all investors. They will know they can trust you if everyone is on the exact same page in presenting a united front. Before even thinking about meeting with investors, meet with every key person on your team to talk about what your plans are for any incoming investments or funding and exactly how it could help your business. Plan out what could go wrong in a worst-case scenario and what your backup plan might be for handling it.

3. Update Your Business Plan

It is likely you already have a business plan. Write and adapt a new one that caters specifically to investors. Of course, this is easier said than done. Investors are numbers-focused, so it is important for you to be so as well. Know your burn rate and break-even point. Have an estimate on your first-year cash requirements, and what the gross margin is. Compare that to your industry’s average. Be realistic about growth rates and how your costs will inevitably increase and change as your sales and profits do. It is of course great to be optimistic about how quickly sales will go up, but be sure to back these with numbers and to be realistic.

Be detailed in your psychographics as well. What kind of person is your customer, and how are you getting them to buy your product? Ask yourself what the cost of customer acquisition is, discuss it with your team, and keep a record of that on your business plan, as well. Convince investors that you went through every situation imaginable and ran every number you could. You know your industry and business through and through, so you will be prepared for any question they could throw your way.

4. Do Your Research Before Your Meetings

Know exactly who you are meeting with, and be selective on who exactly you want to invest in your business. This may require some introspective thinking. You may be in a position in which you need money to grow your business, but you have every right to be picky and to decide where your outside money is coming from.

Your business strategy should match your backer to your financial needs rather than the other way around. Think about whether you prefer a bank loan or venture capital investor. Learn exactly how they do business and what their history has been. Make sure these investors even have the funds you want available to them.

Plan out the specifics of each meeting in a project management tool where all attendees from your team can access the information (get recommendations for helpful project management and collaboration tools here). By building a collaborative view of the investor and your ability to impress them, your team can be on the same page before every meeting.

5. Establish a Good Rapport

There are ways for an investor to know you before you even meet one another. Look for a trusted reference to make an introduction between you two. Not only will they be more likely to hear your pitch, but you will already have a foundation and common interest to discuss.  Or, start from the other end. Make an investor wish list and search for every one on LinkedIn. You never know when you have a mutual connection with someone who could make an introduction for you.


The relationship between your business an investor is a strong one, and you can make sure it will be a positive experience from the beginning by doing your homework and research even before meeting. A stressful and high-demand situation can turn into a mutually fruitful business plan for both parties if you take the one chance you have to make an impression and use it to your fullest.