What should you be doing and thinking now?
How much control you can relinquish?
What level of control do you need to retain to be able to operate your business on a day-to-day basis? Loss of control in your business is one of the biggest disadvantages involved in selling equity stakes. There are situations where the founders of a business who invested years of their life into the company,
are voted out of the company by investors or driven out due to change. Be careful to consider how involved you wish to remain and if it is of concern look at non-equity investment options.
Get your house in order
Investors will inspect your Company documents before making a decision whether to invest so are they up to date & concise. Are the accounts available if not can you get references or draft accounts? They may also want to know if your IP is registered/valued.
A credible business plan
Investors are put off by long technical documents; they want to know what your product/service is ,how its performing and how it is to be marketed; Investors want to know see that they will generate a return & that you have a risk management strategy. You will need to prove your business is compliant with all legal and accounting requirements so ensure financial controls are in place.
Preparation is key
Know your potential investors and whether they actually have the experience and finances to invest or understand what their objectives are. Allow them time to make a decision but keep in contact during this process, updating them with positive developments and news.
Experience goes further
Investors with experience have so much more to offer, they have contacts, knowledge and support which they will want to provide to your business. They want to see you succeed! If however, you don’t want to relinquish equity consider alternative investors such as entrepreneurs looking for a visa or other debt finance options.
Understand your market
Make sure you can demonstrate a knowledge of the market that your product/service is in and concisely communicate this to your investors. Investors will be holding confidence in you that you know your competitors and will want to know how you will respond to competition to put your business ahead.
Your investor’s point of view
Anticipate what they are likely to ask and think about certain scenarios. Make sure their potential questions will not expose flaws in your business strategy.
Ultimately investors want to know how they will get a return on their investment, make it clear within your business plan what your exit strategy is. Debt finance will need a commitment.
Whoever or whatever your investor is, ultimately your business has to look attractive to investment.
For more information contact us…
0207 426 0382
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