Reducing owner dependency
I need more equity to grow my business - how do I attract it?
Be clear about what the money is for
- Identify the purpose and benefits of the required investment.
- Be specific about how the monies will be used.
- Quantify the potential of the opportunities to the business.
- Provide forecasts to cover at least the next three years with clear objectives and strategies.
- Ensure that the forecasts are based on realistic assumptions.
Show where you are now
- Prepare a business plan explaining the historical growth of the business, its operations, key competitors and main clients.
- Spell out what is unique about your offering.
- Identify the strengths and weaknesses of the business and provide solutions as to how any weaknesses will be addressed.
- Assess whether your management team is credible and whether you need to make further hires.
- Be prepared for investors to carry out detailed due diligence on your business.
Identify how the investors will be rewarded
- Decide how much equity you are prepared to give away.
- Consider the use of loans and performance targets.
- Identify where the investors' exit will come from.
- Seek professional advice on the terms of any potential investment.
Carefully research your target investors
- Make sure that you target an audience who is keen on your business sector and the amount of money for which you are looking.
- Understand what else they have done within your sector.
- Ensure that your first approach is focused and clear in order to move the process forward to a meeting.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.