6 Things You Should Have in Place Before You Look for Financing

6 Things You Should Have Before Financing

If you’ve ever watched the TV show ‘Shark Tank’ you know that is a scripted show that is designed to play on the emotions of anyone with an of entrepreneurial blood in their veins. The show features several investors (“The Sharks”) who listen to sales pitches from people with business startups. A lot of the folks that appear on the show trying to sell their business investors are on the show because they are eccentric and make for good TV. Many make outlandish valuations on their businesses and are countered, in some cases, with ridiculously low counters. While not entirely true-to-life, the show offers inspiration to young and aspiring entrepreneurs.

One of the things that does ring true is: If you do not know the value of your company/brand/products you’re going to lose. When you’re meeting with potential investors, you have to have your act together, and you need to be prepared. Here are 6 things you’ll want to have before you start conversing with would-be investors:

  1. A Business Plan РNot just any business  plan. A cogent, comprehensive and well thought-out business plan. One that takes into account a variety of scenarios that tell a story about what you can/will do with the money.
  2. A Marketing Plan – The marketing plan can be part of the business plan, but it should be able to stand alone as its own, as a valuable asset. The marketing plan should include branding, messaging, positioning as well as the go-to-marketing strategy. It should include a SWOT analysis for all major products or services.
  3. Legal Protections – Prior to “opening the kimono” it’s critically important to have secured any applicable patents, trademarks and copyrights. It’s incredibly important to protect your intellectual property. Without a patent your billion dollar idea may not be worth anything. You need to protect yourself from competitors, but you also need to protect yourself from unscrupulous investors who may “borrow” your idea.
  4. A Good Handle on Costs – If you’re producing a product, know your cost of goods manufactured and cost of goods sold. If you’re selling a service, make sure you know your margins and have a good handle on revenues and expenses. There is no excuse for a business owner to not know this vital management data.
  5. A Good Cashflow Model – In addition to current and historical revenue figures, investors will want to see good a good cash flow models. It’s usually a good idea to provide a best case, worst case and likely case. The best case should illustrate what you will do with an additional infusion of capital and how you will use it to drive revenues and cashflow.
  6. A Realistic Valuation – You may not want to tip your hand on what you think your company is worth, but it’s important to know, realistically, what your company is worth. The VC or Private Equity will have their own idea of what your company is worth and what they’re willing to invest. Investors will allows try to structure any deal and its terms in their favor. Knowing what your company is worth can help you readily counter any lowball or unrealistic offers.

Do you have all the pieces you need to grow your business? Are you ready to go after investment dollars? We can help! Let’s talk!¬†