Seeking Bill Gates!

December 30, 2007 5:31 AM

Where do I look for investors?

I have completed a business plan for a yoga studio and will begin to look for investors at the beginning of the year. Where would I go to look. I have been told that a good place to look is the back of newspapers in the want ads as ads or posted for people who are looking for business opportunities.
I've also read that blanketing friends and everyone I know with copies of BP is also another way to do it. Any other insights.

posted by goalyeehah to science & nature (6 comments total)

I'm sure you've heard this before, but be prepared to jump cleanly outside the lines with this stuff. Plan or no plan, you're going to have to talk to what will seem like 5,000 people before ever hearing anything resembling a "yes."

I don't know that I would blanket them with the plan, but do at least mention it in passing. If they're interested, they'll talk to you. Also, keep an open mind for alternate methods of financing when you're out looking. You might bump in to someone who has the perfect location for a studio and is willing to give you six months rent free to get started.
posted by cdmwebs at 6:18 AM on December 30, 2007

Rule #1 of raising money is to raise your own money first. This is called a 'friends and family round,' and you basically have to pitch in your savings, as well as funding from investors *legally* determined to be "friends and family". If you can't get your family to invest in your venture, you will have little luck persuading outside investors to do so.

If you can raise this cash, then your best bet may be to go to a bank or an institution like the BDC in Canada, present your business plan, and ask for a loan. The thing is, services like yoga studios are not usually scalable; it is unlikely that you will be able to use the initial cash injection to ramp up and develop an entire chain of yoga studios that will in turn increase the ROI.

However, if you have a solid business plan and can demonstrate basic competence at running a business, you can present a low-risk investment to your potential investor. However, because of the low risk the ROI will be slim, which is why I would recommend a bank.

But you need to go through a friends-and-family round (this includes yourself) first.

It's advice that no startup likes to hear, but Rome wasn't built in a day, and people will take you more seriously if you can raise your own money first.

Securities regulations differ from state to state, or from province to province if you are in Canada, so be sure to check the exact meaning of 'friends and family.'
posted by KokuRyu at 7:40 AM on December 30, 2007

Do you have a single page executive summary of the business plan? How about a short "elevator pitch?" You need to seduce people, and they is no way you'll do that if you lead with the full business plan. You also don't want to give away everything about your plan until you know someone is serious, and there may be feed back you get in peliminary conversations that you might want to incorporate before pitching the full plan.

As for where to look, are you a yoga practitioner? Do you have clients who might make good investors? How about other practitioners who might have independent ambitions of their own, and some savings set aside towards that goal (or the ability to help cosign a bank loan).
posted by Good Brain at 10:05 AM on December 30, 2007

KokuRyu is spot on.
posted by Pants! at 11:42 AM on December 30, 2007

If I was planning on opening a yoga studio, I would spend a few months working at as many health club chains as I could and building up a steady client base that would most likely follow me to my own studio. At a health club you'd get paid a flat rate, but when you open your studio you could charge for each visit or sell a series of visits. Having a bunch of clients would be more impressive to any lender since you will have an up front business base to start generating cash flow right off the bat. Building a loyal following can take a while so use any chance you can get to break in offering classes at regular gyms and start a mailing list for those folks and eventually let them know you are opening your own yoga studio. Be a little subtle about it so the health club doesn't freak out and accuse you of poaching their clients.
posted by 45moore45 at 3:10 PM on December 30, 2007

Be sure to check out the programs and assistance offered by your local Small Business Administration (SBA) office. I know the one in Oakland has advisers working (I believe) pro-bono and frequent events/workshops designed to help you refine your business plan and network with investors and other small businesses. There may also be other various free services that you can qualify for.
posted by fishfucker at 12:53 PM on January 2, 2008 [1 favorite has favorites]