If your company is at a point in its history and experiencing solid growth where you are considering looking for outside investors for your capital needs, then you want to know if your business will be or can be attractive to investors. If you plan to search for equity investors, you should know that they will expect a significant return on their investment (20% to 50% is not uncommon) and many times within 5 years. These investors will look carefully at the candidate company to characteristics that include, but are not limited to: a solid and proven management team; potential company growth; solid business plan; and evidence of strategic thinking and planning in a strategic plan with vision, mission core values and short term & long term goals.
And the equity investors will expect you to give up a portion of your business. So, one needs to carefully consider: Do I need equity investors as a source of capital to grow the business? If you decide to obtain equity financing, here are 5 major actions you will need to take and probably in this order (although they can be done simultaneously to some degree):
1. Build a trusted advisory team. Select an attorney, accountant/financial advisor and business coach to build that team. This advisory team will be a key resource to your business and will help you develop your business plan, guide you through this process, provide introductions to key contacts and networking for you.
2. Develop a strategic plan and a business plan. The strategic plan includes the vision and mission for your business, along with the core values or guiding principles of your business and the short & long-term goals for the business. The business plan is the action plan and will include an executive summary, your business strategy, a SWOT analysis, market research, financial projections, etc. My advice is to try to find out what the investors like to see in the business plan and customize it and tailor it to their needs.
3. Determine the value of your business. You will need t enlist a professional to assist in this and would recommend that you seek referrals from your advisory team as to who may best be prepared to do the valuation.
4. Network! Again, use your advisory team for contacts. There are many investors in the network that are not “publicly” known or advertised or that only work from referrals from trusted sources.
5. Interview and select an equity partner. Carefully plan for an interview process and use the talents of your advisory team again. Prepare a list of questions to ask each prospective investor. Explore multiple revenue sources to get the best deal. You want to find the best personal fit and the best business fit when selecting the equity partner.
You will need to “keep the faith” and not get discouraged in your pursuit, as you will encounter disappointments. My advice is to use those disappointments as a learning tool and to identify the “lessons learned” in each disappointment. Use strategic thinking and planning to re-write parts of your business plan if necessary or to develop specific aspects of your business. Always stay focused on your vision, mission and goals for your business. And always remain patient, persistent and positive in your search!
If you want to learn more about what resources are available to entrepreneurs and business owners looking for investors and other insights into this process, please contact Glenn Ebersole through his web site at www.businesscoach4u.com or by email at firstname.lastname@example.org
Glenn Ebersole, Jr. is a multi-faceted professional, who is recognized as a visionary, guide and facilitator in the fields of business coaching, marketing, public relations, management, strategic planning and engineering. Glenn is the Founder and Chief Executive of two Lancaster, PA based consulting practices: The Renaissance Group, a creative marketing, public relations, strategic planning and business development consulting firm and J. G. Ebersole Associates, an independent professional engineering, marketing, and management consulting firm. He is a Certified Facilitator and serves as a business coach and a strategic planning facilitator and consultant to a diverse list of clients. Glenn is also the author of a monthly newsletter, “Glenn’s Guiding Lines – Thoughts From Your Strategic Thinking Business Coach” and has published more than 250 articles on business.