Attracting investment funding can be a difficult and time-consuming process, particularly for new businesses without a trading history. Jack Stephenson, corporate and commercial solicitor at Harrison Drury, offers some top tips.
1. Be clear what type of funding are you seeking?
In the first instance, you will need to work out what type of investment you are seeking. For example, are you looking to borrow funds from a bank, through equity finance, crowd funding or from a family member? These days, there are many types of alternative finance available, so it’s important that you consider your options carefully and weigh up the pros and cons of each.
2. Put in place a business plan
This is a vital step, regardless of the type of investment you are seeking, as most investors are likely to want to see a detailed business plan, which will include information on which they can base their decision to lend, and their ability to be repaid.
It’s worth including a concise executive summary setting out the key headlines of your business. Your financial forecasts should be clearly set out, including profit and loss accounts, balance sheets and cash flow statements. It may also be prudent to include monthly forecasts throughout the first few years.
3. Value your business sensibly
Reputable investors are likely to be off put if you value your business too high. It is therefore important that your figures are realistic. As per the next point, it may be worth considering professional advice to assist you with this.
4. Seek professional advice at an early stage
Although funds may be tight during the early stages of your business, we would still recommend that professional advice is sought. For example, a financial adviser could assist with your financial forecasts and make you aware of any tax/funding incentives that you might be able to benefit from.
5. Practice your Pitch
At some point, you are likely to be required to deliver a pitch to your potential investors. How you approach this will depend on the type of investor you are presenting to (for example some may adopt a more laid back approach, whereas others might require a formal presentation).
Whichever you are required to do, it is important that you practice your pitch thoroughly and make sure that you are familiar with your business plan and forecasts.
For further information on raising investment funding, or any other corporate and commercial legal matter, contact Jack Stephenson on 01772 258321.