brief overview what to consider if business owners to prepare for potential investors - gain clarity bfore getting investors on board.

1. 5-steps-to-sell the dream and prepare
your company for investors
Markus Schwarzer
Certo Limited 1

2. Most Small Medium Enterprises (SME’s) face tough choices on
how-to-grow:
 keep ticking over and consolidate the current business but be
limited by own funding access or
 seek investors to grow into new markets and/or develop new
products and services.
Seeking, and eventually accepting investors, means ‘giving up’
control. This may be hard to swallow for business owners.
 On the other hand a pro-active investor may bring highly sought after
expertise into the business.
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3. A tricky decision point for business owners –
Consider the following 5-steps before embarking on finding
investors:
1 Set
your
goals
2 Be clear
on your
strategy
3 Do your
housekeeping
4 Have an
exit door
5 Sell the
dream
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4. 1 Set your goals
What is your ambition? Are you prepared to relinquish some control?
I have worked with businesses that sought investors but were not
quite clear why they were considering getting investors on board.
To fix negative cash-flows or reducing debt may not be the best
motivation to engage investors.
 Set 2-3 main goals on why you want investors, e.g. do you want to set
up business in a different location because you believe
(and can demonstrate) that you can create value with your unique
business proposition?
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5. 1 Set your goals (cont.)
Or do you want to develop more digital products and need an investor
with expertise in that particular field so you can complement your non-
digital value proposition?
2 Be clear on your strategy
“The investor of today does not profit from yesterday’s growth”
W. Buffet
 Position your business clearly by naming your 3-5 key
strategies going forward based on your performance to date.
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6. 2 Be clear on your strategy (cont.)
 State what was achieved so far and what the future may hold – point
out the growth potential and support this with research and a
suggested marketing strategy.
This will ensure that any potential investor can see that you have
thought about the future and that it is build on a solid foundation and
market research. It is vital to convey confidence in your value position
and this in turn will give any potential investor a level of comfort too.
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7. 3 Do your housekeeping
Housekeeping’ is often underestimated – meaning getting your
internal processes in order, e.g. fully understand your internal activity
chain, streamline your financial reporting, fine tune your business
dashboard (if you use one) and your personnel management.
 Once a potential investor is showing interest in your proposition, you
want to put your ‘best foot forward’ and and demonstrate that your to
date performance is no fluke – your business processes are ok.
Sure they can be improved but they are good enough for now.
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8. 3 Do your housekeeping (cont.)
Again, you are more confident and the investor is also getting more
confident in you and your business.
“Price is what you pay. Value is what you get”
W. Buffet
 Be realistic when you value your business - There are many
approaches in establishing an accurate valuation. Finding the best
method for your business will provide you with the best measure of
value.
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9. 4 Have an exit door
 Always leave the exit door ajar – an investor will jump on the wagon
or may jump off. Consider you own future in the business.
Perhaps you wish to reap the benefits of your hard work and increase
your personal liquidity, or maybe you would like retain a minority
interest as a shareholder and hand over the management.
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10. Now you are ready to add a little passion to your investment proposal
– you have the foundation work done and are now getting into
marketing mode.
Stay away from clichés such as ‘unique opportunity’ and ‘once in a life
time…” etc., bring your own flavour or secret sauce into it.
 Convey the energy that made you set up the business in the first
place, including the sacrifice, struggle, the joy and commitment and of
course the future opportunities – these things matter to investors!
Consider the 5-steps before thinking about getting investors on
board.
5 Sell the dream
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11. Markus Schwarzer
Worked in senior financial positions at leading international companies
in New Zealand, Australia and Europe.
Markus is a graduate of the prestigious Berlin School of Economics &
Law and now director of Certo – a niche consultancy that works with
small and medium sized organisation to improve business processes
that deliver real, measurable results.
About the author
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Go to my website to find out more about
business process improvements – Work
Smarter not Harder.