Are you
ready for finance?

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.

<p>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.</p>

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 individuals involved.

STAGE 1: Evaluating your growth ambitions

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.
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?
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

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

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.
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

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