So you’ve got a business. It’s going pretty well – you’ve got some staff on the books, you have a good product and the balance sheets are adding up well. Where do you go from here? For many, this is all that is needed – according to Forbes, around 90% of independent businesses are small, possibly family-run affairs that have no dreams of market or even global domination. However, if you see yourself as the next big name in the industry and want to take things to the next level, you will almost certainly need an investor to provide you with the sweet, sweet dollar you need to expand. However, investors are a savvy bunch who know the intricacies for a business to work and be worth an investment – how do you stand out from the crowd

 

YOUR BUSINESS 

 

There are very specific types of businesses that tend to attract investors, no matter the size.

 

  • Must be successful and well-established – essentially, it must have a proven product and business model within its market.
    • What investor would put money into something that wasn’t already successful?
  • You must have a workforce, but ideally only a small one.
    • Investors are looking for minimal long-term costs, which employees represent, but rather large returns on incremental monetary input – essentially…
  • Your company must be
    • Investors are looking for companies that will see their cash injections turn a quick profit rather than be a long-term investment.
    • A company that develops a proven product but needs investment to scale up their manufacturing process is a perfect opportunity for an investor as a small amount of investment will allow for far more stock being developed and instant sales growth.
    • A company that provides consultancy as its main product is a much harder sell as training new employees is a far more subjective and long-term consideration than a quick and easy manufacturing expansion.

 

YOU 

We’ve all seen Dragons’ Den – the founder and CEO of a company is as key as the business itself. Investors will almost always want at least some control over the business in some regard and that involves forming a partnership with its creator.

 

  • You must be fully committed to your company and must be totally certain of its ability to succeed.
    • It sounds obvious, but investors will be looking for someone who they know is willing to put the graft in and knows exactly how to achieve what they want to achieve.
  • You must be ready to cede some control.
    • This is why a work-force is important for investors – in the words of Martin Zwilling, a start-up expert writing for Forbes, investors are looking for people to work with who are working on their companies as opposed to in The day-in day-out must be being handled by a competent team so that you, as CEO, are working on strategy and the bigger picture.
    • Additionally, you must be willing to both listen to and action the advice of your investors as they bring a wealth of contacts and experience to the table.
  • You must be honest, realistic and grounded.
    • Your valuation of your company and belief in its potential can easily be clouded by optimism and sentiment – you must be sure that all the information you give to investors as part of your pitch is as accurate as possible. Independent auditors can provide an external, impartial view.

 

 

YOUR PLAN 

Leading on from the above point, even if your business is proven and you are a strong candidate, if you don’t have a clear, achievable and realistic business plan for them then they simply won’t be interested.

 

  • Use market research to demonstrate potential.
    • There are a number of companies that can either be hired directly, or have resources that can be purchased, that demonstrate the market trends within the industry your company operates within – find trends that demonstrate that your company can upscale into a successful operation.
  • Make sure your plan is as streamlined as possible.
    • Upscaling means growth, but this growth should always have best practice and streamlining of processes at its core. Automating production is a good example of this as opposed to expanding the workforce unnecessarily.
  • If you are looking for globalise your company, looking at licensing and franchising as means to develop in a less labour-intensive way.
    • Ceding control to others with market experience abroad is a good means of working on the business without being in it – intricacies are dealt with in a streamlined manner but the burden isn’t yours to shoulder.

 

If you stick to these three core principles, you’ll be batting the investors away with a stick. Make sure you pick the partnership and the deal that is best for you and your company and who knows where you’ll go –  the sky’s the limit!

 

 

M.Underhill