WHAT DO I NEED TO DO TO GET MY BUSINESS READY FOR INVESTMENT?
In the same way that the 3 keys to understanding property are location, location and location the 3 keys to get ready for investment are preparation, preparation and preparation. All of this you know. But it is how you do it that counts; so it is important to make sure that all the dots are joined up. Even simple things like making sure that the messages on your website are consistent with those in your business plan.
Of great importance to any successful deal or investment is to look competent, professional and well prepared. The whole process is about two unequal and opposite forces colliding. Their team wants a low price – and your team wants a high price and doesn’t want anyone chipping away at the price. Simply by building confidence and making access to information easy for a potential buyer or investor, you can attract a better pool of potential prospects and improve on the ultimate value of the transaction.
Let’s start though with a few basics. The most attractive qualities in a potential business investment or acquisition are proven profitability and future earnings potential. So it should be all hands on deck to illustrate these points and /or improve them, if one can, in terms of trading. In addition it is worth commissioning specific and independent market research (on your industry’s growth potential) and to gather together relevant industry reports and statistics to back up your case.
Simultaneously it is important to get “battle ready.” This isn’t just about getting your sales pitch ready but is about ensuring that your financial records are fully up to date and properly documented, board meeting minutes are properly signed off, staff records, sales records and major contracts are suitably packaged and any other relevant documents are speedily available for any potential purchaser or investor. Having these types of documents, in advance of the Due Diligence phase, fully prepared in an organised manner and ready to hand underpins trust in your organisation – which in turn improves the chances of a better outcome.
Simplicity has great value. Investment is all about selling the future; but an investor will want a clear picture of the past. If it takes time and detailed explanations for someone to “get” your business then everything is the wrong way round. The ball is in your court to ensure that the basic business model can be clearly expressed in as short a time as possible.
Then there is the business plan itself. Most business plans tend to fall down in 2 areas. Firstly can the plan be achieved within the timescale or is it over-optimistic? More often than not it is. Secondly is the growth pattern credible and sustainable? Proving it is the issue. Having absolute clarity on the data and a well-defined cost of customer acquisition is vital. It is important to pay extra attention to and to stress test these two items in particular.
A further consideration is communications. What do you tell the market about what is happening and how up to date do you keep your staff? A proper communications strategy and protocol needs to be worked out in advance because the important focus is to remain in control of the content, timing and output of any news feeds.
It is all about preparation, preparation and preparation. But actually getting the timing right, in terms of market confidence and conditions, can also play an important role in producing a satisfactory outcome.