Many small businesses are initiated or expanded with the help of loans
and investments. Most business owners use loans or grants to secure
their small-scale business. It can be difficult to get loans for small
business; in some cases investors are reluctant to provide money to
small business owners because they are afraid of not being repaid.
Several factors contribute to the lack of interest by investors in
small businesses, such as fraudulent use of invested money, small
business downfalls, and personal disputes with small business owners.
Some of the chief reasons why investors say "no" are:
Most investors say no to small business investment because there
has been great fluctuation in these businesses, or because they
question the authenticity of the business.
There is considerable risk associated with these types of firms.
Often the money provided by the investor is locked into a small
business if the company makes no progress. In some cases, the
investments in these small businesses have proven to be severe
financial losses for investors.
Investors say no to small business investment due to the threat
of fraudulent activities that have increased in small businesses.
There have been numerous occasions where the investors have been
cheated and deceived by false businesses.
The location of the business, target market of the business
and possible expansion and development of a small business may
not be fully understood. By not having a solid business proposal
and plan presented, most investors are wary of investing money
in a small-scale business.
Most small business owners fail to present some type of collateral
or individual agreement with the investor.
There are other small factors which contribute to an investor refusing
a small business investment. Lack of proper promotion of a small business,
lack of marketing skills possessed by the owner, unoriginal business
plans and strategies are among the key reasons why investors say no
to investing in small businesses.
