Investors Follow Those Who Invest in Customers
Photo by Andrew Neel / Unsplash

Investors Follow Those Who Invest in Customers

To build a successful business, it is crucial to prioritize your customers over investors. Investing in your customers is a wise decision because they are the foundation of your business and the key to its growth. When you focus on providing value to your customers, you create a loyal customer base that attracts investors naturally. 

By investing in your customers, you build a relationship of trust and loyalty. You can achieve this by creating products or services that meet their needs and exceed their expectations. Satisfied customers will not only keep coming back but also recommend your business to others, resulting in increased sales and revenue. 

Investors are attracted to businesses with a solid customer base and a proven track record of success. When you prioritize your customers, you demonstrate that you understand their needs and are committed to meeting them. This, in turn, increases your company's valuation and makes it an attractive investment opportunity. 

Investing in your customers is a smart business strategy that pays off in the long run. By focusing on your customers and providing them with exceptional value, you can build a loyal customer base that will attract investors naturally, leading to the growth and success of your business.

Investing in Customers is the Key to Attracting Investors

As an aspiring entrepreneur, you may be under the impression that the key to a successful startup lies in securing huge investments from investors. However, this is far from the truth. Genuine startups rarely begin this way. Instead, it is essential to focus on chasing customers rather than investors.

By prioritizing the acquisition of customers, you will be able to demonstrate the viability and potential of your product or service. This will, in turn, generate interest among investors who are always on the lookout for promising ventures to invest in. It's crucial to understand that investors are primarily interested in companies that show signs of growth and profitability. By showing that your business is capable of attracting and retaining customers, you will be able to create a strong case for investment.

It's common to encounter young entrepreneurs who believe that they need to secure investment first before launching their business. However, this approach is often counterproductive. In fact, capital tends to flow towards companies that don't necessarily require it. This is because investors are more interested in companies that are already profitable and have a proven track record of success.

Therefore, it's crucial to focus on building a strong customer base as early as possible. By doing so, you will be able to demonstrate the potential of your business and attract the interest of investors who are looking for promising ventures. Remember, chasing customers is the key to success, not chasing investors.

How One Founder Built a Successful Hotel Business by Focusing on Occupancy

When the founder started his first venture in the lodging room industry, he quickly gained traction and increased customer occupancy rates. As a result, the venture earned a commission, also known as earned gross fees, which caught the attention of other hotel owners who were interested in collaborating. This led to many investors becoming excited about the potential of this startup and approaching the founder to discuss investment opportunities.

Prior to the lodging room venture's success, the founder had approached numerous investors but received no response or interest in investing. However, as soon as the first hotel owned by the lodging room venture started generating significant profits, investors began to see the potential in investing in the venture.

To put it into perspective, if one were to start a cloud kitchen business, it may not be wise to invest in the equipment, pay the rent, or hire chefs right away. The founder's sincere recommendation is to avoid investing too much in the early stages of a cloud kitchen business. When an investor chooses to invest in a business, they have faith in the founder's vision and potential for success. Similarly, the first landlord and first chef hired in a cloud kitchen business can also be considered investors who have faith in the founder's vision and potential for success.

Think Big, Profit Big

Thinking out-of-the-box is a great way to explore new opportunities, and one such opportunity is profit sharing. Profit sharing can be a mutually beneficial arrangement between two parties where one party shares their profits with another party. This type of arrangement can be attractive to businesses such as restaurants, building, or mall owners who have a lot of value but are struggling to make profits.

If you are looking to start a cloud kitchen but lack the necessary cooking skills, you can hire a chef and make them your co-founder or partner to share profits with. With the right business plan and confidence, you can collaborate with chefs during these COVID times, as many are now out of work and are aspiring to start their own restaurant business or cloud kitchen.

When starting your business, it's essential to focus on improving the quality of your product or service and providing additional value to your customers. For example, if you're opening a hotel, you can increase occupancy by improving the quality of rooms and photography, changing the white light to warm white or yellowish light, providing Wi-Fi to customers, and offering free breakfast.

These added facilities can help your hotel's listing on travel and similar websites to improve, increasing your visibility and attracting more customers. As a result, you can generate more revenue and profits, which can be shared between the business owner and its partners.

It's important to calculate the unit economics of your business and prove your business model's sustainability to attract growth investments. If you can provide a profitable and sustainable business model, you can attract investors who are willing to invest in your business and help it grow.

Investors are always looking for opportunities to invest in businesses that have the potential to generate high returns, and profit-sharing can be an attractive proposition to them. With the right planning, execution, and strategy, you can create a profitable and sustainable business that can generate wealth for all parties involved.

Investors

Lodging Room Venture's first investment was made by a group of seasoned investors who had previously invested in other successful ventures such as Snapchat and several other renowned companies. The investors were attracted to Lodging Room Venture's business model, which sought to cater to the common man as customers and create partnerships with thousands of small hotel owners.

Initially, the founder had spoken to other potential investors, who found the business idea interesting but were hesitant to invest until they saw some growth and progress. However, in just four months, the collaboration with investment "X" enabled Lodging Room Venture to scale its operations to eight hotels successfully. This fueled the interest of many other investors who were now keen on investing in the Lodging Room Venture brand, leading to a highly competitive investment landscape.

As a result, the founder had to carefully choose the next investing partner. This highlights the importance of scaling a business effectively, as it can lead to investors approaching a company and seeking to invest in its brand, rather than the other way around.

Wisdom

If you're an entrepreneur looking to attract investors, there's a valuable insight to keep in mind: instead of chasing investors, aim to make them chase you. The best way to do this is by building a successful business prototype that convinces potential investors of your company's potential. 

When investors start reaching out to you with offers, you'll have the upper hand in negotiations. This can lead to multiple investment offers and even competition among investors to fund your business. 

To increase your chances of success, collaborate with the right investors who share your vision and goals. By working together and sharing benefits, you can build a strong and mutually beneficial relationship that sets your business up for long-term success.

 

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