When starting up a business, part of the capital comes from personal savings and some from investors. Most businesses seek investors to help boost or to kick off their idea prior to making profit from the businesses. Most have probably watched shows such Shark Tank or the home grown Simba Savannah which put pitching to investors in perspective. What if what you need for your business is not an investor? Below are 5 Reasons why you shouldn’t look for investors for your business.
1. You will be selling ownership
Once you get investment, you don’t own your entire company. That means that you are answerable to your investors and can’t make decisions without consulting them.
2. Numbers matter to investors
Your business idea might have a niche market that can still increase your sales. If the numbers are too little, investors might not want to be part of what you do. You will need a very convincing business model that will attract and convince investors.
3. Putting value to your company might undermine its worth.
The percentage you offer investors then determines how much value your company is. If you offer 10% for 100,000 investment you are valuing your company at 1 million. This might not be the value of your business idea when it makes it’s profits and gains market share.
4. Investors want to monetize their investments.
You will need a smart exit strategy to make investors happy. The goal is to make profits off your company. Start up investors want to earn from their investments hence they are not up for dividends.
5. Investors can take your company away from you
Depending on your share equity, the fact that investors have rights means they can take your company.