Notorious for adding value to any business or property they partake in, investors are usually known as smart money. However, the added value varies from investor to investor. This, along with other investing variables, is what usually gives birth to vague or unrealistic expectations from businessmen or rough coordination between both parties. That explains why people are at a loss to know how to work with an investor.
By definition, investors are people who are willing to give the businessman a certain amount of capital in exchange for a profitable financial return in the future; they are business investors. People who own a property and are utilizing these assets for an extra source of income are real estate investors.
Whichever type of investor you are working with, this article will help you work with them a lot smoother.
What to Expect?
We have made up a list of some realty on what you can expect from an investor that can help prevent you from disappointments.
- No matter the type of investor you are dealing with, you can expect your investors not to be emotionally attached.
- It is unreasonable to expect an active involvement from your investor.
- Your investor will let you run the business whichever way you want as long as you have a steady stream of profit cashing in, and all the assets are protected.
- You can expect your investors to help you, no matter how inaccessible they might seem.
- If your investor appoints a middleman or an intermediary, then they can help assure a more active shareholder involvement. This is a good thing for you if you want your company to succeed.
- An investor can ask you to pay a small fee annually that can help keep both you and them held accountable. However, it is up to you to see if a paid non-executive position is what you need.
- You can expect that an investor has done their homework when it comes to your business. You should perform due diligence when you find an investor that fits your business perfectly. Check the investor’s portfolio as well as their usual approach towards their investments.
- You can expect high talk from them, but even top investors fall flat if they are not formalized in agreements. You need a tangible way, like a legal contract or an investment fee, to realize your investor’s promises.
- You can expect your investors to want all due respect form you especially in maintaining a solid, transparent and progressive relationship
How Quickly Can They Help?
The reason you won’t find a straightforward, one-word answer to this question is that, again, it varies from investor to investor. Some investors like to start immediately in goodwill. While others prefer to start contributing after all the due diligence is done, the follow-ups wrapped, and all the approvals secured.
The timeline of an investor, however, is a variable that can be predicted, which is why it is always a good idea to have a strategist on your team. These strategists are extremely experienced with long term investors.
Which brings up the question: who exactly should be involved in the whole process?
Who Should Be Involved?
Apart from the two parties involved, i.e., the investor and the owner, having an investor relation department or an intermediary party is a valuable inclusion. They can help further smooth the relationship between both parties and result in company success.