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The simplest way to start a business is, usually, through boot-strapping, but not all businesses fall under the bootstrap category.
Going into boot-strapping, you already, assume that, you will bear the risk that comes with it.
If you, even, have the financial capacity, to kick-start and operate your start-up, by generating money, getting additional capital is, an essential option, to scale your business.
How do you go about convincing people, (Venture capitalist and Angel investors), that your start-up business is worth their investment?
You might have your focus, on the wrong metrics. Metrics are not sufficient enough, to tell the story of your start-up and its potentials for investment.
These wrong metrics, often get people to be impressed, but not the people you want to, actually, impress, who are your potential investors.
What will impress your target investors, are the operational metrics that indicate growth and profitability; this is the story that, interests investors.
Here are some of the examples:
Customer Acquisition Cost
In the last two weeks, you have acquired a few thousands of customers.
That appears great for a start-up, nevertheless, it does not tell the story of your start-up journey.
What would have made a great story, include factors like, customer lifetime revenue and their retention rate.
You may be adding new customers, at the speed of light, but that might come at a high cost when compared to the lifetime value of the customers.
“We landed a thousand new customers”, is a proud statement, for a business start-up, but beyond this exciting story of customer growth rate, an investor wants to know more, about your customer acquisition cost.
Number Of Users
Your start-up was launched, with an app and you feel excited, as your dashboard gave you a good number of downloads.
Beyond these numbers, are your users active with the app? Getting to download an app is, easy, but you need to give users, the reason why they need to be active on it.
Why design an app that, will soon get out of use? Users want an app that, solves their immediate problems, (purchases, transport, health), making their lives better.
This is the success story that, investors want to hear and not just the large number of downloads.
Customer Service Response
With their multi-channel approach, a number of businesses connect with customers, on their preferred platforms.
There is no doubt that a part of success in business is, great customer service.
Good customer service can, however, hide a basic problem, (identifying a problem that needs to be fixed), as customers with a bad experience, hardly return, no matter how convincing you may be.
A good business fixes problems, but a great business, looks for ways, to remove the problem in order to stop its re-occurrence.
You can have, a one-time customer, but having customers, who are ready to, repeatedly work with you, is a solid foundation, for a healthy business.
When you have customers that, are loyal, they prove the worth, of your business, as you deliver on your promise and fulfilling it. They spread the word on your business.
Investors, really, love that, you, as a start-up business owner, deliver on your words. Then you can get assured of an investment opportunity.
