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ROI for investors

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Whether you are borrowing money or receiving an equity investment, you have to repay your investors somehow. Either you will pay back the money you receive, with interest, or you will allow investors to receive a share of the company profits to recover their initial investment and receive an additional ROI for as long as they continue to participate in the company.

Explain how they will get their principal back, what their profits will be, and when they can expect to receive each of these components.

All of the financial data in your plan should confirm the proverbial icing on the cake for your investors - the return on their investment.

Not only are investors always looking to get their investment capital back - preferably without too much hassle - they are also sniffing around for the juiciest ROI on offer.

Don't be fooled by the idea that investors do not have plenty of great opportunities coming their way. For the most part, they have many more opportunities than they could possibly consider being involved in. In part, though, this competition is a strategy instigated by investors.

Keeping the competition high allows the investors to isolate the most lucrative deals and fight for the terms they want.

Your investors' profit, both in dollars and multiples, is a key component of your deal. If you can't demonstrate a sizeable profit to complement the various protections you establish for the initial capital investment, all your effort will have been in vain.

You must offer investors a sizeable profit both in terms of the actual dollar amount and the percentage return on what they invest - the higher the better, on both counts.

Establish what ROI investors can expect per quarter and per year as soon as the company starts to make a profit. Calculate the percentage ROI and the dollar amount.

Remember that your business plan and financial projections detail the make-or-break components of your capital acquisitions deal. There are two key points, however, about capital acquisitions deals. First, you must prove that your investors' capital is protected. Second, you must demonstrate (as far as possible), the certainty that your investors will enjoy a sizeable profit for allowing you to control their capital. Use the details of your business plan and financial projections effectively.

Don't offer a deal that your research and projections do not support.

Calculate the value of the opportunity for your investors and use the result of this calculation as your basis for closing the deal.
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