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Plan for investors [Entrepreneurship
Posted on February 5, 2013 @ 03:44:00 AM by Paul Meagher

If you have built your business from the ground up, you may be reluctant to give up ownership of that company to a private investor. If you do give up ownership, you may be reluctant to give up enough ownership to encourage investor involvement.

Many of these issues are avoided if your business plan includes room for investors to get involved in the formative stages of your company. This does not mean that you seek investors before you have reached significant milestones or achieved some traction in the marketplace, but it does mean that there is a plan in place to have investors involved at critical stages in your companies growth so that you can accelerate or ensure growth.

Instead of a business plan oriented around the idea that I will own and run company x, your business plan might be oriented around the idea that you will eventually have co-investors and co-directors in your company so that you can reach your goals for growth in the best way possible. Growth planning is easier if it includes room for co-investors and you make plans to use the equity you have built up to get funding for your company at a critical stage in your companies' growth.

A plan for investors may be one in which your first set of milestones are specifically designed to get an investor on-board rather than to achieve early profits. It may be designed to get your future customers using your product and helping you to evolve it rather than getting them to pay to use a beta product or service. Your plan may be to get an investor involved when you are ready to exit a beta stage and are ready to scale and/or market your product or service.

So the moral is that giving up a piece of your company is not so painful if you have planned for it. This is very different than running out of money and feeling torn about giving up a piece of your baby to an investor to keep it running.

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