December 15, 2015 by Andrew Schwarz
Attracting investors to your business can mean new life for your old dreams. But investors don’t just throw money at everyone – they take their finances seriously and they are always looking to build more wealth – not throw money away. To help your business catch the eye of people who can support its growth, it’s important to present your business well – and have a solid plan.
The following steps can help you attract an investor:
1. Business Profitability
To attract others into investing into your business, it’s important to show your business is currently profitable or will be profitable in the future. To maximise your profits, it’s about taking a holistic approach to your business. It’s not something that can be done overnight, but by being realistic about the way your numbers crunch, you can find out where your budget can be tightened and what internal processes can be streamlined to achieve greater profits that make your business more attractive to potential investors.
2. Document Your Business Plans
You may know your business vision but without having a professional business plan in writing, no sensible investor will take you seriously.
All your business processes should be documented. Without appropriate documentation, how can you hand over to anyone? To make your business worth investing in, the way you operate needs to be transparent and understandable – with processes and procedures that can be explained and duplicated, even when you are not there.
Having a professional business plan done is an investment in both dollars and time but if you are seeking to grow, it is an investment that could help attract genuine financial growth – making you an appealing proposition to investors who can get a clear sense of your business value and what its future potential might be.
3. Scale proportionately
Scalable businesses need to grow well – and wisely. More importantly, things need to grow at the right stage – with everything working together smoothly. If your team is too small and your business model is too big – it’s a recipe for disaster and something no investor will feel confident supporting. Even the best business plans can come undone with too little money – or too much money if it is not being spent in the right way.
4. Have an Advisory Board
An advisory board is a hand-selected group of people who have the experience and skills to provide both practical advice and support to business owners and shareholders. The strategic advice they can provide is non-binding and informal in nature – something that can offer positive flexibility, as opposed to the more rigid nature of a Board of Directors.
By implementing an advisory board for your business, you can access independent views and a safe environment to discuss important business-building issues.
5. Understand your business value
Be realistic about your value as a business. Too many start-ups fail because they claim a valuation that is not accurate and has no professional projections to back to it up.
By understanding what you are really worth – and how you can build on that – you will become much more attractive to potential investors.
6. Create Diverse Incomes
You’ve surely heard the expression about having your eggs all in one basket – and you understand the obvious perils. To attract the interest of would-be investors, it is important to showcase your business as one that has potential to grow and survive. With income coming from just one source, the risk of your business value being lost is much higher. Your business model needs to show different streams of income. If this is not the case, focus on building up some new areas that extend beyond your traditional single-stream approach.
Investors need to see a proven track record so it is prudent to start now and build success – that way, when you are ready to take an investment pitch to market, you have the runs on the board to secure interest and financial support that will help your business continue to boom.
7. Create a Diverse Customer Base
In the same way different income streams add value to your business, diversification within your target audience is also a good business decision. It’s something that will be a natural flow-on of the advice above – when you add different opportunities to create income, it is obvious that you will also add diverse customers.
It’s just another way to add true value to your business and show it as a growing concern, whose success is not reliant on one product, service or slice of the market.
8. A Supportive Team
Building any business can be a lonely journey and data shows that start-ups with at least two or three co-founders are much more likely to succeed than single owner start-ups. Because experienced investors also know this, they are far less likely to fund ventures run by just one person.
The lesson is to build a quality, committed team with diverse and complementary skills. Make sure the blend contains a mix of tech, marketing & sales and financial expertise for the ultimate funding drive.
9. Solve A Problem
Finding your niche in a competitive market is key to succeeding – and attracting potential investors will depend on your ability to accurately articulate your vision and what problem your business solves for potential customers.
9. An Easily Defined Pitch
The simpler something is, the easier it is to market. If you want to convince investors to help your business grow, be clear on what you do. If you can’t say it in one neat, engaging sentence, your potential investors might have lost interest before you’ve asked for the money.
To find out more about how you can take the right steps to attract investors and grow your business, or if you need help raising capital, talk to our AS Advisory team today.
Tags: Corporate Advisory