As an entrepreneur, you are creative and dynamic, benefiting from a solid business plan and an opening in a unique field or industry. As an entrepreneur, you are also unprotected. Investment fraud is a real possibility that every entrepreneur must understand. There are crooked people, posing as authentic investors, and they often prey on an entrepreneur’s fund-raising endeavours. This is a time when you’re most defenceless, and it doesn’t matter what place you’re in, someone is about to cheat you.
But small and start-up companies still require funding. Without aid from venture capital firms and private investors, it can be challenging for entrepreneurs to get their business plans off the ground. So how can you be sure the firm you are negotiating with is all he or she pretends to be?
The following tips serve as a model for entrepreneurs to help them make smart market investments. Keep in mind; these tips are simply guides to help expose potential danger. There is a chance legitimate investors may or may not follow some of these practices. However, it is always better to be safe than sorry when it is your business plan and your investment. With the below tips, you can better ready yourself to dodge future fraud scenarios.
- First Impression is not the last. Although first impressions are usually healthy, they should not settle when picking a private investor or investment group. Just because a company or an individual has an ornate web site doesn’t mean it is legitimate. Web sites can be created in only a few hours. After a short span of taking money, a site can disappear without a trace. Don’t judge a company/individual by their site. Look for other signs of authenticity for their investment network or group.
- Do Your Homework – Research: One of the reasons investment scam exists is because business owners and entrepreneurs aren’t always accurate. Of course, you are confused and busy. But picking an investment group for your business is no time for bypasses. Don’t invest in anything you are not sure about. Please do your homework on the investment to guarantee that it is legitimate. Please do your homework on the company or individual to ensure that they are legitimate.
- Research More: Check out other web sites concerning this company/individual. If this business plan is your idea or company, you owe it to yourself to do the due diligence of digging deep. Remember, desperation will always work against you, and so, the deal can wait a few days until you find out how authentic they are.
- Be Careful of Unsolicited Investment Opportunities: Be cautious when responding to exceptional investment opportunities or offers (primarily through unsolicited e-mail). Discuss all the terms and conditions before signing anything. Ask about every aspect, and get every sanctioned paper they have. If they’re willing to fund you, they should be ready to run the extra mile for your sound mind.