6 Steps to Investor readiness
Raising funding is not an easy task for any business. Whether it be for expansion or acquisition, it will usually need a strategic business plan and professional financial business planning to be successful. The key reason is that most financial institutions are looking to de-risk the loan advance and experience has shown them that an organised and focused business make the most reliable customers. To maximise your chances of being accepted for debt, equity or other investment, the following 6 steps are a useful guide as part of your business funding support.
1. Mapping out your corporate vision in both outline and detail is a crucial first step. Your ability to show the investor that you are clear in your business approach and can communicate it concisely or in greater detail, is an important first step in winning their support
2. The next step is to explain the management skills and abilities to not only run the business but develop it. Try to cover all the key positions such as Managing Director, finance, sales etc. but don’t try and paper over any weaknesses. Instead, show how the funding is aimed at strengthening and improve the organisation as financial justification
3. Having analysis of your competitors and an ability to benchmark yourself against them is extremely powerful. It demonstrates your industry knowledge which is reassuring and your ability to measure success in tangible terms
4. In seeking financial help for your business, having an excellent understanding of the sector is probably the most important aspect. In this, we are not just talking about your ability to describe the challenges that you will face in commercial terms, but also how you propose to overcome them. Backing this up with external data such as market research reports that confirm the market size and help confirm your approach will certainly be positively noted
5. The strategic financial plan should cover both shorter and longer term objectives of the company. It would not be unusual to provide an integrated profit & loss, cashflow and balance sheet that detailed the projected corporate performance monthly for the first 12 months with annual projections for up to a 5-year period. Some investors will want to test your forecasts, so having some pre-prepared sensitivity scenarios will impress. Incorporating the forecasts into your current management accounting and reporting is also considered good practice
6. Having complied the above into your investment pack, the final stage is to approach targeted lenders/investors with your proposal. A good advisor will have done research to narrow the approached down to the most appropriate organisations that have available funds. There is no need to flood the investment market with your proposal as this could be both detrimental and time consuming
We hope you find this approach both instructive and rewarding. It has certainly proved successful and provided the cornerstone of our client business funding support for many years. Good luck!