The economic clouds are gathering thick and fast. Is it still possible to attract an investor to fund your growth?

A grey global economic outlook has been made all the more gloomy for new companies seeking to attract investment. In March, 3i announced that it would no longer invest in early-stage technology and media companies.

Nick Butler, executive director of investment consultancy Connect Yorkshire, offers the following advice on how to address cautious investors during tough times.

Let the potential investor know what's in it for them
Your pitch isn't just about what you need: it's about them too. Business angels and venture capitalists are more cautious during a downturn so they need more assurances that they will make money. Can you demonstrate that your proposition is capable of giving them a return on the cash they put in with clear and realistic projections?

Demonstrate your understanding of the downturn
Investors will be impressed if they can see you understand the implications of a slowdown in the economy. Instead of aiming to secure investment within your original timeframe, adjust your timescale to address investor caution and demonstrate your business acumen.

Continue growing
Just because everybody is more cautious in making buying or investment decisions this does not mean that you can't continue to grow the business. Be more aggressive in taking your competitors' business. Be more professional and offer better customer service. Attract your competitors' customers and you will attract investment.

A focus on profit
As well as growth, concentrate on profit: the latter is more attractive. You may only be able to demonstrate a small volume of sales to investors but if your profit margins are strong then an investor will quickly see your personal business acumen and potential to make more money during good times.

Cashflow is king
Watch your expenditure and bank like a hawk during tough times. Cautious investors want to see a very tight control over your finances. Also, if you pay any big lump of cash into your bank and thus reduce the amount borrowed, the bank may reduce your overdraft limit. Be ruthless when managing your cashflow.

Ensure your business contracts are lead-lined
A regular review of business terms will help your business be more flexible and prepared for a downturn. If investors can see that you have long-term cashflow through your terms of business, it can make your company more attractive.

Don't cut off your nose
You may have a clear strategy for the business and solid objectives but be prepared to be flexible. If you can be agile and take advantage of limited opportunities, investors will see a willingness to adapt and use your initiative. They will also know that you will be adaptable to taking their advice if they decide to invest.

Get the right advice
There is a lot of information and help out there so make sure it's from a trusted or recommended source otherwise it might send you in the wrong direction. The best advice is always from people who have real hands-on experience of the key issues.

Find an experienced mentor
Having a great mentor can get you through the hard times by learning from their successes or mistakes. If they have been in business for a while, they will have experienced a downturn and will know what to do during an economic slowdown. Also, having someone on hand to talk through your concerns can alleviate some of the pressure you may feel.

Protect your IP
Have you got your staff under confidentiality clauses? Any good company is working on some sort of innovation all the time so that it can keep ahead of their competition. The costs of obtaining a patent can be prohibitive and, in any event, not all innovative steps are patentable. Also if the worst comes to the worst and you have to cut employee numbers you don't want your ideas leaving with your staff.

Sell the experience, knowledge and commitment of your management team
Investors generally back people more than ideas so selling your track record and drive is as important as your product. Demonstrate that you are in the business for the long haul and that any economic blip won't affect your vision and drive to make a profitable company.

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