Are you ready for finance?

How do you know that you’re ready to take your business to the next level? This checklist is designed to help you understand what you need to do to prepare your business for investment.

Please note: This checklist is not part of an application process for external finance. However, we hope it gives you an idea of what is involved and what you need to do to prepare. Investors may ask for more or less information about your business and the finance you need than what is set out below. This will change depending on the individuals involved.

Stage 1 - Evaluating your growth ambitions

Do you have a clear growth ambition?

You need to have a clear vision in place and understand what you are trying to achieve. This could be anything from creating new products, to acquisition, to expanding into new markets.

Do you have a plan to achieve it?

Understanding the vision is one thing, but you also need to have a roadmap for how you will get there. For example, if you are planning to expand internationally, is your first step to speak to an existing contact in that new market?

Do you know how much money you need?

Businesses often over and under sell themselves in negotiations with investors. Instead, honestly evaluate how much money it will take to achieve your ambition. If you’re not sure, ask the advice of a mentor or trusted contact. Explain your growth strategy and ask if they feel this is the right amount to achieve your goals. And don’t be afraid to plan for money in funding rounds if this is what you think you need. Just be honest in the early stages – as you will have to justify your workings later.

Stage 2 - Evaluating your business

Do you know what makes your business special?

What’s your niche or market advantage? What do you do that your competitors don’t, and is that thing sustainable?

Do you understand your market?

Can you prove you know your market and market opportunity?

Do you have an honest handle on your financials?

You will need to prove past financials, as well as talking about future projections. You’ll need to create a profit and loss statement, a cash-flow statement and a projected balance sheet. You should also consider a sales forecast and expenses budget.

Do you understand your company structure?

From tax planning to not owning your own IP, growing companies can be complex. Being aware of sticking points upfront can help your negotiations with investors and proves you’re being transparent.

Are you missing any key skills?

These could be managerial or sector-specific. Acknowledging that your business can develop and grow is important for a realistic outlook – but it will also help you choose an investor who will offer more than just money.

Stage 3 - Understanding equity finance

Have you considered what share of your business you will give away?

Bringing equity investment on board means giving away a share of your business. There’s no hard and fast rule for the percentage share you should consider, as this depends on the growth potential and valuation of your business, as well as the amount of money you’re asking for. Before you go into negotiations, you need to decide what percentage you’re comfortable with.

Have you considered what kind of person you would like on your board?

Often, equity investment means adding experts to your board. You should consider what kind of skills your business could benefit from. You should also make sure you’re comfortable with investors getting hands-on with your business and having a say in how it’s run.

Stage 4 - Taking the first steps

Have you spoken to any mentors or key contacts?

It can be useful to speak to champions of your business who are experts in their field. Not only can they offer advice, but they could also be able to facilitate introductions to investors.

Have you been networking?

Consider sector and pitch events in your local area. Networking is great for increasing your profile, getting useful help and advice and it may even garner an investment opportunity.

Have you done your research?

Research investors and their firms. Speak to businesses who’ve been through the process before.

Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

Making business finance work for you

Our Making business finance work for you guide is designed to help you make an informed choice about accessing the right type of finance for you and your business.

Read the guide to making business finance work for you

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