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 The Challenge
I need more equity to grow my business - how do I attract it?
The Solution
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
- Consider how the business will finance the investment as investors will usually expect a regular return
- 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 that you are looking for
- 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
- Don't forget to consider other potential investment sources, such as family and friends
Contact Smith & Williamson
This document is part of the Entrepreneurs' Toolkit series, produced by Smith & Williamson. More information on this and other toolkit topics is available at www.smith.williamson.co.uk/entrepreneurs.
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