Competing in today's tough business market requires constant planning, personal drive, and unique products and services. It's often a challenge to establish a foothold in the market as a young business, especially without the financial resources competitors may have.

Bringing in external investors provides additional cash and connections that can shorten development times, boost marketing campaigns and expand target research. Here are three tips to help you prepare for an initial investor meeting.

1. Target Your Ideal Investor

Before your first investor meeting, ensure you've created a clear proposal for investors, one that includes an honest evaluation of your business's current stage. If you're soliciting an idea without a clean proposal for investors, you may not get a meeting.

Make sure you understand the different investor types to determine where to target your efforts. What appeals to your ideal investor? For example, venture capital firms usually engage with more mature companies and focus on increasing revenue and sales funnels rather than providing developmental funding. Angel investors typically get involved early on in a business's life cycle, and consist of just one individual or a small group of investors that pool their resources. They are more active on a smaller scale, funding 16 times more companies than venture capital firms do, according to Harvard Business Review.

2. Rock Your Business Plan

If external funding has become a priority for your business, you've probably already developed a business plan, and it likely shows you need more cash flow than is currently available.

The business plan is the most critical component in preparing for your initial investor meeting. Detail how external funding will help your new product line or service flourish. Investors may expect cash flow and revenue projects as early as your first investor meeting.

Plan to answer detailed questions about how much money your business needs, what it will be spent on and how it will improve profits as potential investors calculate the risk versus reward ratio of your proposal. The Small Business Administration advises preparing for inquiries on everything from your personal financial history to your corporate financial statements. Your product or service earned you the meeting, your business plan will help earn you the money.

3. Prepare for Criticism

Before the initial investor meeting, remember you are asking strangers to invest money in your business. Work out how you will answer tough questions as your business plan is dissected and your credentials are questioned by the potential investors.

By being thoroughly prepared with supporting data and brutally realistic when assembling your proposal and projections, your numbers will stand up better in the face of investors' skepticism. Be prepared for rejection. Your request for funding may be turned down multiple times by many investors.

Keep in mind that a business rejection isn't personal. For investors, it's simply about the numbers and the risk-to-reward ratio an investment in a business represents. Instead, make careful note of the criticisms and use them to prepare for your next investor meeting.

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Tags: small business Investor Meeting investor