How to let potential investors that you are ready for investment
Are you getting ready to seek investment for your business? Find out what you need to put in place to demonstrate your credentials.
John Hilson is Head of Entrepreneurs at Arbuthnot Latham Private Banking, and a recognised authority in the entrepreneur and business development field. In this article he shares his expert insight on how businesses can effectively communicate their readiness for investment.
Investors are looking for a sound business with good growth potential
Balancing the investment needed to grow your business with ensuring your business is organisationally scalable are two mutually inclusive but slightly different considerations.
You shouldn’t be looking to present a fully-scaled business to investors. For example, if you’re turning over £2 million, an investor would be unlikely to expect you to be a functioning like a £10 million-turnover business. Building scalability into your roadmap is the key. Business growth is iterative, and it is a progression, you really want to find an investor who appreciates this.
From my conversations with entrepreneurs, investors are – in the first instance – looking for a sound business, led by the right people, with good growth potential. To that end, your focus should be around ‘people’ and ‘plan’: to demonstrate that you have a sound roadmap which delivers growth, accommodates increasing levels of governance, and allows you to scale.
It is not about delivering everything up front, but putting a business plan to investors that is specific, transparent and achievable, after all they are buying into the people running the business, as much as the underlying numbers.
Five ways you can let investors know you are investment ready
Here are five essential tips to help you show investors you are investment ready.
1) You have prepared a strategic business blueprint
Craft a meticulous business plan that delineates your company’s purpose, vision, and strategic goals. Present a thorough analysis of your products or services, making clear your target market, competitive landscape, and nuanced financial projections.
Articulate with precision your unique selling proposition (USP) and elucidate how your business differentiates itself within the market.
2) You can demonstrate financial clarity and precision
Offer a transparent and precise portrayal of your financial standing, encompassing comprehensive statements such as income statements, balance sheets, and cash flow projections. This includes key financial metrics, showcasing a profound comprehension of your company’s financial robustness.
Clearly communicate how the investment will be used and the expected return on investment (ROI) for investors.
3) You have demonstrable traction and milestones
Showcase tangible evidence of market validation, exemplified through customer testimonials, successful pilot programs, or notable sales growth. Highlight key milestones attained and articulate future benchmarks that the infusion of capital will catalyse. Provide compelling data on customer acquisition, retention rates, and strategic collaborations fortifying your market presence.
4) You can show risk management expertise
Methodically identify potential business risks and articulate proactive strategies meticulously designed to mitigate these challenges. Display a comprehensive understanding of market dynamics, regulatory nuances, and potential disruptors.
Communicate how the investment will be used to address challenges and capitalise on emerging opportunities.
5) You have a robust leadership ensemble
Spotlight the depth of expertise and track record embedded within your management team.
Highlight the team’s relevant industry experience, distinctive skills, and notable accomplishments. Clearly define roles and responsibilities within the team structure, underscoring the team’s collective capability to execute the strategic vision.
Author: John Hilson is Head of Entrepreneurs at Arbuthnot Latham Private Banking
