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Questions & Answers

Posted by Cheryl Mazak on 2015-03-30 21:31:00
Title: Negotiating with Potential Investors
Category: Money

I recently put together a business plan for a new product that I'm gearing up to introduce to the market and I met with a very likely investor/partner today. Because my manufacturing quotes are so completely different in range depending on the bulk of the order, I did not feel that I could really narrow down a specific dollar amount in my business plan. It could vary by tens of thousands of dollars depending on the amount of pieces manufactured, which could also dramatically change the manufacturing price of each piece. Would you say that leaving the amount of capital up for discussion is harmful or strategic? Does it benefit the entrepreneur to discuss options with the potential investor?

Answer:

Kelsey Ramsden
2015-04-10 16:17:00

Hi Cheryl,

I would simply say  to be realistic. Any investor one would want to be partnered with will see through inflated or estimated numbers. Honesty is the best policy. Run the plan under three scenarios: aggressive, moderate and low volumes. Show the investor the range. Negotiate on sales volumes you can support or negotiate a flexible investment rate which has a payment based on results.

Kelsey Ramsden, Founder, kelseyramsden.com