How to attract investors to this company

**RyanRich1016** · 02-07-2009 11:22 PM

Alright so here's my problem....

I'm writing a business plan for a bathroom remodeling company and I've realized a couple key things A) The barriers to entry in this industry are extremely low. Basically if youre a handyman and have money to form an llc you can start a company. B) Competition is extremely high. Large players like Lowes, Bathfitters, rebath control a large portion of the market.

With such low barriers to entry and high competition, what is the key factor that I should focus on in my business plan to attract investors? I feel that our company provides outstanding service and that our marketing and branding will seperate us from the competition. I don't think that this is quite convincing enough for investor to supply us with money......any suggestions?

**akula** · 02-07-2009 11:41 PM

hi..

statistically, service type ventures like bathroom remodeling companies are not financed with external equity, for a long list of reasons, including the nonexistence of a secondary market for these kinds securities (i.e. the investor won't be able to exit their investment)

i'm not sure why you'd assume that this kind of expensive, tiresome finance is available for ventures like yours, but it'll be beneficial for you to accept that it isn't...and then you can move on. there's lots of other, better ways to finance these kinds of shops. perhaps you could talk to peter ireland who'll tell you what your options are.

**Peter.j.bea** · 02-08-2009 01:22 AM

With startup service businesses there are a great deal of ways to acquire funding and investors are available for such concepts as well.

In particular with aspects of this nature look to friends and family investors and you will have a greater shot than with a VC group, although I have experienced quite a few service and maintenance companies acquire capital from Angel Groups. However in a circumstance such as this you must have a more developed structure with a form of recurring revenue (look towards a staffing or contracting with your respective government contracts such as the DMV, department of health etc etc.)

Now, to answer your question more directly. Investors that look towards businesses with those exact same concepts will always look towards two aspects of the business itself. Your solid professional background; which should include at LEAST half a decade of the respective industry in a managerial role, some accreditation or certification in regards to your respective profession and a list of clients in process of negotiations.

The second will undoubtedly be your development structure and growth plans for a 3 year period. The investors will want to see how you plan to expand (I would recommend sticking to the government contracts for bids and a sales force salary based).

Aside from you investors do consider other options. SBA loans, consulting, contracting. I have known a great many consultants in your respective field that play the role of a mediator and shopper for clients so that they dont feel they are being ripped off. With a cut of up to 15% of the projects net savings, that can be a pretty penny and way to make some extra cash as well.

Do keep in mind, there are HUNDREDS of different investors with different interest and tastes. Just because they are not VC doesnt mean you cant find a private investor that would be willing to offer up a loan with a payback strategy pending a great, and well developed business plan.

Just be sure that when you do write that plan out, you are making it at least SOUND fool proof. Offer numbers, charts and examples of other companies already implementing these practices.

Best of luck to you!