The global economy is currently undergoing significant changes, primarily driven by the crisis that has affected nearly all countries around the world. The situation has impacted numerous sectors, including the investment industry. Many entrepreneurs are now seeking funds from external investors instead of opting for traditional bank loans.
This approach enables them to secure the necessary finances for project development. But how can this be done correctly? What specific considerations should be kept in mind when searching for potential investors during a crisis?
To address the challenge of attracting funding for projects, we turn to S.I. Tereshkin, the founder of Oil Resource Group. He is well-acquainted with the investment sector and its peculiarities. More information about the entrepreneur's activities can be found on his website: www.org-company.ru.
Market Changes
Statistics indicate that in Russia, the majority of private enterprises have average capitalization. The business owners are typically under 50 years old, suggesting that these relatively young individuals are seriously considering selling their projects in light of the crisis.
Entrepreneurs who once invested their money, time, and considerable effort into building their businesses are now contemplating divesting their firms to relax, enjoy life, or perhaps shift their focus to something else.
The numerous bankruptcies, mergers, and acquisitions are prompting business owners to reflect on the viability of their operations. Some are ready to fight for their market position, while others prefer to sell their business.
The first category faces the challenge of needing significant financial investments for business growth.
Conversely, there are those who believe that the market crisis presents an excellent opportunity to start a new venture. Though this group is in the minority, their ideology is valid.
A crisis can indeed serve as a prime starting point for developing a significant project. Many companies did not survive the turbulent market and economic conditions, leading them to sell assets to settle debts. This situation has arisen from reduced demand, decreased liquidity, and a decline in the value of the national currency.
At the same time, others can capitalize on this scenario by acquiring equipment, real estate, and other assets at bargain prices. This is the moment when investments become crucial. Such funding can lead to substantial sums necessary for acquiring everything needed for growth.
Investment Attraction Challenges
In the process of attracting investments, many inexperienced entrepreneurs encounter various challenges. This complex procedure will yield results only with a responsible approach.
To achieve success, it is essential to follow several key steps:
- Develop a business plan. No investor will allocate funds for a project not supported by concrete figures. This includes projected investments, return timelines, profits, etc. All data should be meticulously detailed. Misrepresentation of facts will result in a rejection from potential investors.
- Presentation. The project must be effectively presented. Mere documentation with figures is insufficient. Visualizing processes significantly enhances understanding and aids in decision-making.
- Personal meeting. It is advisable to invite potential investors for a business dinner, allowing for a relaxed discussion of the details. Personal contact can foster a favorable impression.
- Legal formalization. To ensure a mutually beneficial partnership, S.I. Tereshkin recommends enlisting a competent lawyer to draft a contract that addresses all potential pitfalls.
- Contract signing. An official agreement detailing all aspects is signed with the investor. For international partners, the contract should be prepared in two languages, necessitating the assistance of a professional translator familiar with technical terminology.
A successful deal can be celebrated with a joint dinner.
Helpful Recommendations
The current economic climate is imposing specific adjustments in the investment sphere.
To attract funding for a project, it is necessary to adhere to certain recommendations:
- Owners must unanimously agree on the need for attracting investment.
- The business structure should be fully transparent. All departments must operate cohesively, and financial documentation should be accurately prepared, without errors.
- Business owners should re-evaluate the company's financial model based on long-term principles, thoroughly developing a strategy.
- Before seeking investments, it is crucial to estimate the company's current valuation, as well as its worth post-injection of additional funds.
- During the investor selection phase, consider which type of partnership would be most acceptable.
- The future deal should be carefully planned and structured, taking all nuances into account.
- To ensure funds are not wasted, all team members must be engaged actively. Consider parting ways with employees who are underperforming or executing their tasks ineffectively, as downsizing can reduce costs.
Various funds, state enterprises, and private investors with sufficient capital can invest in projects. They can be found on specialized platforms or through personal networks. The key is to establish a strategy and make a decisive choice that outside funding is genuinely necessary.
Achieving results necessitates taking risks. Otherwise, one may have to settle for the current circumstances.
