10 ways-to-secure-business-funding


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10 ways-to-secure-business-funding

  1. 1. Local Business Partners: Solving problems for businesses in Manchester and the North West 0161 871 4600 • info@localbp.co.uk • www.localbusinesspartners.co.uk Make Your Business Plan ‘Pret a Manger’ Freshly made and containing enough to satisfy but not overwhelm. Too many business plans try to contain every last detail and writing them becomes a chore with the result that an investor gets a confusing, out of date plan that fails to inspire. Question: Without looking at it, can you accurately summarise your business plan in 30 seconds? The Right Price Valuing small businesses is very hard, one or two variables can change the picture completely. Think in thirds: the post investment value to owner, management and investor. Question: Who will feel the most motivated to drive growth after the deal, you or the management? Are You Really Unique? Uniqueness equals value and that makes it easy to over-estimate. Any investor will assess how quickly a competitor can copy your USP? What’s stopping them? Question: When was the last time you asked 10 customers why they choose to work with you? Ready for Inspection Are you ready for due diligence? It’s not only your paperwork that needs to be in order and confidence inspiring, it’s how well prepared you are for searching questions about the weaknesses in your business and your motivations. Question: You might know your business back to front, but does your Number Two share your motivations? Is your Solicitor on Speed Dial? Has your solicitor got experience of negotiating with investors in a business of your size and the due diligence process? A lot if business owners find they have given away control and equity once their shareholding has been diluted. Question: The level of detail in a deal can surprise, is your solicitor on a fixed fee? Who’s On Your Bench? Smaller businesses are all about the owner but a long term investor might be more focussed on the team who’ll be running the business next year. Do they see things your way? Question: What will your key managers say to an investor about their ambitions for the company? How Much is Enough? If you set your investment level too low you face doing this all over again, sapping investor confidence and professional fees. Too high and ongoing costs will weigh heavy. You must be guided by a single long term aim to get the level right. Question: Are you consistent in identifying your long term goal or does it vary? Top Secret How copyable is your idea? You can’t patent ideas and real investors are more interested in execution than the idea itself but Non-disclosure Agreements make things clear from the outset. Question: Who knows about your ideas right now and what controls apply to them? Where’s the Exit? No-one cares about your retirement plans so who exactly would buy your business once the investment has delivered the growth you want? It’s a short list: trade sale, listing or MBO. Question: Who would want you to remain in the business after you’ve sold it? Don’t Invest in a Criminal Act Arranging investments is regulated by the FSA and breaking their rules can mean breaking the law. You MUST ensure that the investor is being introduced to you properly and it must be clear in whose interests they are acting. Question: Has your solicitor got the requisite knowledge to advise on FSA regulations? For a deeper discussion of financial strategy email our finance partner Oli Randell: Oli@localbp.co.uk Ten Ways to Secure Business Funding These 10 tips will help make your business ready for investment or lending.