Is Your Business Investor-Ready?

As a business owner, you’ve done the hard part. You have a proven product or service, and you’ve operated the business now for some time. You’ve acquired great insights into the industry and significant experience with pricing. Now you are looking for sources of funding for significant growth, and attracting an investor might be the solution. But what do you need to show potential investors to win their attention? Here are a few things to consider.

Start with being able to show that what you’re operating can scale (or can SIGNIFICANTLY grow with an additional product, service or new approach) – AND be able to show it with credible numbers. Potential opportunities vary by business. However, here are just a few examples of growth strategies that make investment attractive:

      • Breaking into new national markets (opening in new cities; new or expanded product placement)
      • Taking it international
      • Bundling products or services – providing buyers/customers with a new total or convenient solution
      • Franchising and/or opening new locations; buying new franchise locations
      • Significant marketing to capture government contracting
      • Buying a competitor
      • A growth concept that is disruptive – creates a new market that changes the existing market (A large scale example of this how the cable industry currently is threatening home security service operators).

Know the funding landscape (who has the money). Not all potential investors have the same appetite. Research who’s out there, and consider who might be a good match for your business.

Have a finely-tuned investor pitch. The pitch should be PowerPoint or Prezi based, be presentable within no more than 15 minutes and, at a minimum, contain the following:

  • An intro about your business – what it’s about and your passion for it.
  • The problem in the market that the growth of your business will be the solution to.
  • Your business’ tangible accomplishments to date.
  • Market research that supports your predicted growth potential.
  • Your knowledge of current and targeted customers.
  • The revenue model. How the expanded business will make its money. For example, if you will be dealing with brokers, value added resellers, wholesalers, or affiliates, you’ll need to show how each member of the value chain, and your business, will make money.
  • The competitive landscape.
  • The management. Show how those who will manage the business as it expands are well qualified to do so.
  • Credible, “sniff test-proof” financial projections, supported by clearly stated assumptions.
  • Growth milestones.
  • Your funding requirements. How much of an investment are you asking for? Be specific and be able to justify the ask. Itemize the proposed use of investment funds .

Have a well-developed business plan. Following your pitch an interested potential investor will want to review a complete business plan.

Consider what, in addition to money, a potential investor might bring to the table – management or market experience, connections and introductions, access to new channels.

Get help. Use others with investor or business consulting experience to assess and fine tune your investor readiness.

This guest blog post was submitted by Paul Arrington, a small business consultant at the Small Business Development Center at the University of North Florida (www.sbdc.unf.edu).