Last week’s post talked about why its necessary to find a separate investors and Web site developers. It talked about why the best Web site developers don’t take projects in exchange for “equity” and why it is a bad thing for Business owners too. Today we address how to find an investor.

Finding an investor for any business is hard. You have two jobs to do. First, convince a potential investor that you have a great idea that can be successful. Then, convince them that you are the right person to shepherd this great idea and make it successful.

It is helpful to put yourself in the shoes of a potential investor — would you help fund this project? Keep in mind that at least 1/2 of all businesses fail within 4 years. A popular outcome would be losing 100% of the investment. Would you like this to happen to you? What attributes would you look for in funding an enterprise?

One easy way to make your job much easier is to start your search for an investor with friends and family. No one likes to do this, but it is the easiest way to raise money for a project. It is much easier because you don’t have to convince your Aunt, father or friend that you are the right person to shepherd the idea. All you need to do is to convince them that the idea is good. Half of your job is done! Even though your investors are friends or family, you still need to document the loan or investment and treat them fairly.

Contrast this with Angel investors and Venture Capital companies which are the other directions you can go — convincing one of those to invest money with your firm will be much harder and they will ask for more say in how your business runs.

What ways have you received investment in your business?