How to prepare your SME for investment
If there was ever a time to prepare your SME for investment, that time is now.
At Smart Team, we understand that going for investment into your SME can be a challenging decision. You may have to give up some control of your company – in most cases, shares in the company too. However, the pay off will be access to capital and to the contacts and expertise of others who can help you expand your company while minimising the chance of financial and procedural missteps.
These are the steps we recommend you take to help make your SME an attractive investment proposition.
What are investors looking for?
First, understand what an investor is looking for. When someone chooses to put money into your company, they’re taking a risk, so you’ll need to provide them with a solid reason to do it. Smart Team recommends having a solid business strategy in place, to show potential investors you’ve got both your feed on the ground and your eyes on the prize, so to speak.
It doesn’t hurt to gather proof of great performance in the past, either. Showing an investor the achievements of your company and staff to date will strongly demonstrate your head for business and leadership skills.
An investor will look for evidence that you have all your legal obligations sorted. This refers to contracts with suppliers, key clients, and staff, in addition to HR systems, and even protective measures taken against common liabilities.
Minimise the risk associated with your business, its staff, its products and services, and its chosen marketplace with strong evidence. The less risk you can demonstrate with genuine potential for rapid growth sustainable by cash flows, the more likely they are to be enthusiastic about investing in your SME.
How can I attract investors to my SME?
Using the points above, you can start to get an idea of how you could make sure your business has the best chance possible for attracting potential investors.
Smart Team advises you to:
- Track the success of your business. Present records to investors that show the rate of growth you’ve experienced since you started the company and provide evidence of achievements.
- Revise your business strategy and create one for investment. Smart Team would be happy to help you plan these – we’d recommend enlisting a professional in any case as you’ll want this done properly.
- Extend and sign contracts with your key staff to show everyone’s in it for the long run.
- Go over all your legalities (incorporation papers, trademarks, contracts, etc.)
- Get hold of all your financial and tax papers and have your accountant review them for inaccuracies. Create a summary that an investor can reference.
- Make sure you have contingency plans in place in case of market failure
- Address risks proactively: show you’re aware something could go wrong, and what you’d be willing to do about it
- Build your market profile: create an influencer programme, aggregate customer responses to boost Unique Selling Propositions (USPs) and prove you’re forward thinking by analysing market and sector data so you can push a ‘vision’ of how things are going to change.
The final steps
Get your business valued by an accountant, come up with an easily tailored investment proposal, and prepare all legal and financial documents required to sign an investor. Preparing for investment is time-consuming but altogether worthwhile if done successfully – the effort you put into making your business attractive will certainly yield results.
Smart Team’s leadership team will be an invaluable resource to you in the raising your investment and we’re always on hand to help you decide which steps to take. We’re experienced at working out successful strategies and business plans, too, so if you’re struggling with those, call 01202 577 500 or email [email protected] for any help and advice you may need.