There?s a mismatch at the moment. On the one hand SMEs are saying there is not enough capital out there and accessing it is difficult, and on the other, the capital providers saying there is loads of money ready to be put to work.One of the reasons for this is the varying quality of business plans that we are presented with ? of the 300 companies we speak to a year, some are very good, others not so compelling. A sound business plan vastly improves the chances of a good pitch to potential investors.
(1) Crunch the numbersOne of the most basic, but also most important bits of information we are looking for is evidence of a strong track record and promising outlook for the business. The best way to demonstrate how valuable you are is by providing a profit and loss account and cashflow figures for the preceding two years, the current year and three years’ forecast. But don?t forget to give the numbers some context as we?re also looking to understand the dynamics of your revenue and cashflow. The more comfort we can take in the predictability of the revenues the bigger the valuation we will place on your business. Financial statements may not be the perfect way to describe how valuable your business is, but if prepared with the right level of detail they can give potential investors crucial insight.
(2) The devil is in the detailInclude a sensible level of detail in the plan to help potential investors better understand the business. Companies can experience significant, one-off working capital swings, maybe you secured a major new contract or had to make a one-off investment in new equipment. Help investors to better understand your business by showing this capex separately from the “normal” year-to-year numbers. It is details like this that can make a huge difference to investors and help seal the deal. Read more on raising capital for your business:
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