A small business owner probably lifts their hands towards the heavens when they receive that first critical injection of capital. Preparation for the funding round was intensive, and when you finally reach that goal you can let out a sigh of relief.
But what happens after you have won over investors and started receiving that long-awaited capital? What should you focus on to make sure investors are satisfied and continue to lend their support?
Business management boils down to asset and revenue management. When efficiently organised, a business owner can focus on their number one objective – making the investors investment grow. As the business develops, so do the requirements. Of course, the product or service you are selling needs to be attractive but there are plenty of other elements you need to pay attention to. Here are some of the basics.
Agree in milestones. No explanation needed. Having a plan that both you and your investor can agree to, will help iron-out wrinkles and set you on your path to success.
Document all assets. New businesses, especially tech-focused companies, might not have the impressive numbers on their balance sheet to support the value of the business that the investors look to grow. This is why it’s important to keep track of and document all growth driving assets whether tangible or intangible, such as networks, contracts and patents.
A growing number of companies don’t benefit from the traditional valuation methods and thus fail to attract investors. Learning to note down the elements that yield much of what makes the company special (and thus increase its value), is not important only in the start-up phase but throughout the company’s existence. You can read more about our take on intangible value.
Document strategies. Small businesses most often use their capital investments into onboarding new staff. While it’s great to get more helping hands, it’s important that your strategy, milestones and overall goals are well-documented in order for new staff to be able to roll up their sleeves and get to work. The sooner they understand the product or service they work to sell, the quicker your investment will start producing revenues.
Document knowledge. Human capital and the knowledge that comes with it is fragile. Your employees can be 100% committed to building your company with you today and leave the next when they get a better offer from a competitor, taking their knowledge with them. Businesses that can document the knowledge of its employees will be much more prepared to reach their future goals, whether they be linked to investor relations or productivity.
Provided that the above-mentioned steps are in place, you are already well on your way. However, as the business venture grows, it gets more complex and requires more capital. This will also require more comprehensive ways to convey your value to investors.
Marketing. Make sure you have your marketing channels thought-out and ample resources in place to produce content. Having an efficient marketing machinery to tell your story will support your sales and save time. A recent study by Weber Shandwick, reveals that 70 percent of investors monitor social media channels for what is being said about their investment target so it is important to establish and manage your social media presence properly.
Personnel. When your business is about to venture out in unknown waters, it’s crucial to have in place a leadership team that knows how to steer the ship and avoid the skerries. Knowing when to make a risky move is as important as knowing when to avoid one.
Business model. The bigger your company gets, the harder it is to redirect its course. Latest, when scaling-up, you should double check that your business model and pricing strategies are justified and in-line with the market needs and expectations.
Budding international sensation
Servicing an international clientele might already be in the DNA of some online companies. However, growing an international presence in terms of establishing offices and personnel in countries around the world, is slightly more complex than setting up an online shop.
Strategic partnerships. You might have the rules of your company’s home market all figured out, but when growing the business in a new territory you will face a completely new legal and regulatory environment. It is wise to have specialist partners involved when planning expansion in new regions. Start with a good financial and legal advisor who knows the market.
Financial needs. When you are aiming to get b-round financing, make sure you understand what is the best type of investment model four your needs. Equity investment might be the thing you know, but at times a bridge loan or a mixed funding model might be what’s actually needed to mitigate the risk properly.
Patience. Always be prepared to wait. Especially, if you operate within an industry that requires a license. Decision processes can be lengthy and there can even be cultural nuances at play that you are not used to. Have a good plan in place, understand the requirements of the market and have a contingency plan in terms of budget and timing and be ready to hit the ground running when you get the green light.