Securing third party investment can be a great way to take your business to the next level. But how do you go about it? Here are 9 factors investors look for – and how you can get your business investor ready for growth.
Most investors start by looking for an opportunity, and most commonly invest in new, promising sectors. What share of the market do you want to attract – and do you have the capability and potential to achieve it?
They’ll want to assess where you are in the current market and where you could be in the future. If you operate in a crowded market, get crystal clear on the things that make you different. If you’re trading in an emerging market, they will want to focus on probable market growth, and the factors driving it.
Sound project management is key to executing your business growth strategy, allocating resources and funds and spending investors’ funds. Fast-growth businesses taking investment tend to be involved in a number of complex projects and initiatives to meet challenging milestones and an ambitious strategy.
Control extends to governance of projects and, importantly, how funds will be spent. Demonstrating strong project management governance and discipline before investors make the leap of faith will give them additional confidence.
Any potential investor will want to investigate why your team is well positioned to build and execute your plan and become a market leader. What expertise do you offer that makes your business a thought leader or influencer in your market? Do they have the skills required to drive sales, exploit marketing opportunities, develop leading products and services and – of course – to run the business efficiently? Do you work together well as a team, without friction?
You may be able to give yourself a head start by demonstrating that you’ve already taken action and made progress on your goals for growth.
Being able to produce data to support your forecasts – and proof that the market is already engaging with your product and providing helpful feedback – will go a long way to prove your commitment and set your business apart from the competition.
The integrity of your data is a vital piece of the jigsaw, and a key hurdle in the process of due diligence. Clean, complete and accurate data can help to instil confidence among potential investors, which should always be presented wrapped with a solid governance strategy.
Fast-growth businesses all too often overlook processes and controls in favour of speed and agility, yet procedures can empower innovation, rather than the contrary. Providing potential investors with an up-to-date, in-depth process manual will give your business the edge, and answer any questions. Management information should be aligned with your business strategy, and any discrepancies in budget should be clearly explained.
As a management team, you should be able to demonstrate that you’re aware of potential risks in your market and your business – and that you have plans in place to mitigate them.
It’s good practice to have a risk register regardless of whether or not you’re seeking investment. The level of detail this needs to contain will depend on the maturity and complexity of your business, the environment you operate in, and the amount of funding you need.
This is the piece of the puzzle that can be hard to quantify – that special something that sparks a genuine interest in your potential investor, or a defining moment that impacts the investor’s decision. Sometimes it’s easy to spot – perhaps you share a common background, or trusted mutual connections.
In other cases, it might be harder to define, such as likeability or a hunch the investor develops. It pays to spend time researching your potential investor’s background to spot these connections, and it’s important to be authentic throughout the process.
Never underestimate the importance of investor fit. This includes factors such as the stage your business is at, the industry you operate in, and even the investor’s experience in your market.
The greater the connections between your business and your potential investor, the better the fit. Start by doing your research so you don’t waste time with an investor that isn’t in the right space to help your business grow.
If you’re keen to attract investment in your business, get in touch to discover how we can help get your business investor ready. Email us today: activate@accountechprofessional.co.uk
Cole Accounting Ltd.