External investment supports expansion plans, helps grow extra workforce capacity and helps businesses develop and market new products, enter new markets or move to larger premises. Whatever that extra finance is used for, businesses that continue to flourish need further funds for the likes of an acquisition or the creation of a complementary company.
More prosaically, businesses need access to external investment to ensure cash flow. A mistake that has proved fatal for many businesses is having insufficient operating funds. Business owners may underestimate how much money is needed or may have an unrealistic expectation of revenues from sales. Access to the right types of finance is vital to a business’ success, according to the Confederation of British Industry (CBI). Yet difficulty in accessing trade finance can and is holding businesses back.
The CBI claimed access to trade finance is becoming increasingly difficult for some markets. In a survey of global trade finance providers, it found 69 per cent of respondents cited anti-money laundering and ‘know your customer’ requirements as a highly significant impediment to trade finance. Some 59 per cent cited issuing banks’ low credit ratings as a highly significant impediment to trade finance.
Here are seven key areas for business owners and FDs alike to consider when preparing a business for external investment:
1) Build your market profile so that investors want to invest in you
There are several initiatives that you can take to generate market interest (and more business growth).
a) Create an influencer programmes. Invest in good PR and marketing support to help tell your story. Forge relationships with industry influencers such as industry analysts, bloggers, independent product reviewers who can validate your company vision and proposition.
b) Aggregate customer responses to boost your USPs (unique selling proposition). Some industries may be more sensitive than others. A way around this issue is by aggregating data from your customers either through your own internal systems or through an anonymous survey. In fact, this type of approach can sometimes be more powerful than a single voice.
c) Predict the future. Stand out from the crowd and analyse market trends, consider offering up a point of view of what’s shaping your industry sector – and be bold in your statements!
d) Work closely with partners and your channel to market. Build up a strong partner eco-system, including business partners to enhance your credibility. Joint ventures are a good way to create a buzz.
Read on for points two to seven.