How to Become Investment Ready
As a small business owner who is looking for funding, it is important to discover how to become investment ready. You may require funding to accelerate growth or to take advantage of a specific opportunity. Before you secure the right investment package, it is important to focus on the right things. You can either ‘go it alone’ or you can get some help from someone who has a track record of success.
In this article, we will look at the key steps to becoming investment ready for small businesses with a turnover of approximately £5 million to £20 million. By following these steps, you can increase your chances of attracting potential investors and securing the funding that you need.
Develop a clear business plan
A well-thought-out business plan is the foundation for becoming investment ready. Start by defining your business goals, target market and competitive advantage. Outline your growth strategy and the opportunities and challenges that lie ahead. Your business plan should also include revenue and cash flow forecasts, and P&L statements. These projections should be realistic as possible.
Have a separate marketing plan
Marketing is too important to only have a brief mention within your business plan. It is a good idea to have a separate marketing plan. Key topics should include customer segmentation, positioning, differentiation, key messages, products / services, pricing and promotion.
With regards to differentiation, are your products or services at least 20% better than your closest competitors? If not, how can you make this happen? The Oakwood Partnership can help you to create winning positions in the market you operate in.
Describe the market opportunity
What is the market opportunity for your products or services? It is a good idea to carry out market research so that you can show the size, growth potential and trends in your target markets. Describe your value proposition. Show how it addresses a genuine need in the marketplace. Provide data and customer insights. Investors in small businesses often have a successful business background themselves, so they know from experience what they are looking for.
Show that you have a scalable business model
Investors like businesses that can scale rapidly and generate substantial ROI (return on investment). Include a clear growth path within your business model, without a significant increase in costs. Describe how you will create systems that can be replicated as customer numbers increase. Highlight competitive advantages, IP (intellectual property), and a USP (unique selling proposition) that differentiates your business.
Have a strong management team
Investors will want to know about you and the team behind your business. The Oakwood Partnership, for example, can help to strengthen your team, as we work in close association with the businesses that we have helped to raise funding for.
Show your team’s expertise, experience and track record. Provide succinct profiles of yourself and key team members, emphasising relevant experience and previous success. Additionally, demonstrate how your team’s skills complement each other and how you plan to attract and keep talent at all levels as your business grows. A strong management team builds investor confidence and it cannot be overemphasised.
Show what you have achieved so far
Investors are more likely to invest where previous success can be demonstrated. Highlight successful product or service launches, customer / client acquisitions, revenue growth or other success indicators.
With regards to customers / clients and revenue, show what you have done so far. As well as writing about this, you could also display the data in a striking, visual way. Proof that your business model works, will help your cause.
Describe your financial strategy
What is your financial strategy? If you are learning how to become investment ready, being able to discuss your financial strategy and systems clearly and confidently will help you to raise funding. This is one of the areas where a third-party financial expert can make all the difference. Show how you plan to use the investment funds and how they will contribute to the growth of your business.
Would equity financing, debt financing or other forms of finance be better for you? The Oakwood Partnership has considerable experience of working with different forms of finance, as well as working alongside entrepreneurs. We take the time to understand your business, so that we can make appropriate recommendations.
Determine the amount of funding that you require and the equity stake you are willing to offer in return for it. Be prepared to justify your valuation to potential investors.
Learn how to present your case
A slidedeck alone will not win over investors. It is important that you learn how to present your case to busy investors. They want to see that you have the right qualities to deliver on your promises and to make it all happen.
Conclusion
Becoming investment ready requires meticulous preparation. By showing that you have a clear business plan, strong management team, scalable business model, clear market opportunity, track record of success and financial strategy, you can present your growing business as an attractive investment opportunity.
With the right approach, a well-prepared investment proposition and knowledge of how to become investment ready, you will be more likely to attract the right funding package to achieve your business growth ambitions.
We wish you all the best with your business. If you would like to discuss any of the issues raised in this article, let’s talk on: 01789 867686
We have the experience, knowledge and contacts to help you to succeed. As well as funding, we provide financial management, training, marketing, business development and other resources to help you to succeed on a larger scale.
See also: Advice for a growing business
Advice for entrepreneurs in Birmingham
Funding a growing business in Birmingham
Stratford-Upon_Avon business advice
>>>> Business growth strategy workshops