Investors can be a wonderful accelerator of your business, but you can’t approach them until your company looks solid. They need to see that you’ve done your homework and that you are ready for additional money to result in the desired increase in business value. Here are 6 things you need to fix before meeting with potential investors:
1. Clean Up Your Financial Records
Clear, accurate financial records demonstrate your organization’s and investors’ readiness to run a business. Ensure that your income statements, balance sheets, and cash flow reports are up-to-date and succinct.
The U.S. Small Business Administration urges having at least two years of well-organized financial information before pursuing investment, reinforcing the things investors look for before investing. Utilize accounting tools or employ a professional bookkeeper to ensure that everything is consistent and supports investor readiness.
2. Strengthen Your Business Model
Essentially, investors are interested in knowing how you make money and whether that method could work for long periods. According to Harvard Business Review, scalable business models draw many investors.
Scalable models facilitate your commercial growth without increasing your operational expenses significantly, which helps with getting your business investor-ready. Go through your pricing, margins, and client procurement approach to ensure they suit your niche.
Also, you should identify your business model’s unique selling points. The clearer and more concise your business model is, the more likely investors will realize why they should invest in a venture, strengthening investor readiness.
3. Create a Strong, Engaging Pitch Deck
Your pitch deck is your story in slides and a key signal of investor readiness. Your business, market opportunity, and revenue model should be easy to grasp. Your pitch deck should also be short, visual, and engaging.
Investors choose decks that have traction, such as user growth, revenue achievements, or partnerships, according to the Y Combinator Startup Library. Avoid jargon and long descriptions. Instead, explain the issue you are addressing, how you will address it, and why you are the right people to solve it, all of which support investor readiness.
4. Sort Out Legal and Compliance Documents
Be 100% sure your legal and compliance paperwork is in perfect condition before you go to investors, as this step is fundamental to investor readiness. This includes registration papers, shareholder agreements, all contracts, and intellectual property rights.
The Australian Securities and Investments Commission recommends looking at ownership structures and validating contracts from the get-go to evade issues down the line, which supports how to prepare your business for investors. In case your clients are outside of Australia, make sure you’re compliant with global data protection and global trade laws.
5. Strengthen Your Leadership and Team
Identify the strengths of your current team today and find the possible skill gaps that can hinder growth, as leadership depth affects investor readiness. McKinsey & Company noted that successful companies have strong top teams; include them in your presentation.
What do you think of your team, and why is it exclusive? Is it the mix of unique experiences, technical skills, or proven results? Besides, you can get additional points by getting some mentors or advisors on board.
6. Know Your Market and Competitors
As an entrepreneur, you are expected to have a complete understanding of your business sector, which is critical for investor readiness. This includes your customers, their decision-making process, and your competitors. Investing time in market trends, purchasing behavior, and potential sectors is required.
According to the Entrepreneur Media Network, detailed knowledge enables investors to view your company as a smart, data-based investment. Additionally, be ready to explain your company’s competitive edge, which sets it apart by doing something better, quicker, or more cost-effectively than other companies and reinforces investor readiness.
Preparation Builds Investor Trust
People often act like scorched cats when dealing with investors, but you need to focus on what is under your control. These factors are your finances, pitch, team, and understanding of the market. Investors want to invest in an organized, transparent, and confident founder. When your business is ready, you look not just worthy of investment; you seem to be a partner worthy of belief.
