Demonstrate good investment potentialWhen creating and presenting a business plan to investors, the focus should not only centre on why this is a good business, but why it’s a good investment. Demonstrating a sound business plan including financials, operating requirements, an analysis of the customer base and how to reach it is important, but equally important is the investment opportunity and potential return. We started Office Space in Town because we identified an opportunity to capitalise on the need for a new model of office – one that provided an alternative to conventional office space, including more flexible leases and work space arrangements. Currently valued at around £16bn, the serviced office sector is projected to increase, by 2025, to £62bn on conservative projections and £126bn on optimistic forecasts, according to a leading think tank report that we commissioned. The ability to demonstrate a strong strategy, growth projection, potential investment return and ultimately track record was important in convincing investors that Office Space in Town represented a compelling investment opportunity.
Stand out from the crowdAn important factor for investors is how a company stands out from its competitors. Does it offer a completely new product or service, or offer it in a new way? Understanding the competition and how to defend your company’s position in the market is essential. Office Space in Town’s distinctive proposition helped us to secure funding. Unlike the majority of serviced office providers, Office Space in Town operates a freehold model, allowing us to make greater investment in the design and facilities of the buildings than if we operated a leasehold model. The quality of the offer to tenants, added to the appreciation of the bricks and mortar value of the buildings, helps the business to stand out from its competitors, making it a compelling proposition for investors.
Room for growthInvestors want to see that a business is sufficiently scalable. For us, this meant demonstrating to investors that our model could successfully be applied to new buildings and that our business could adapt effectively with this expansion. Investors are looking for a good return on their investment, usually within a five-year period, and will want to see contingency plans both for slower than expected growth or significant growth beyond projections.
Be prepared when securing investmentA good investor will do their homework on both the business owner and the business itself, and will be looking for reasons not to invest. It is therefore essential to be ready with answers to any questions that they may have on issues ranging from operations, personnel and growth projections to queries about the competition and market as a whole. It is vital, when answering questions, to state facts, and keep projections realistic using accurate growth metrics, and resist the urge to exaggerate or embellish. However, if you are well prepared a pitch situation offers the opportunity to showcase your business model and market knowledge in a convincing way.
Be selective who you talk toFinally, take the time to research potential investors. What does their portfolio look like? What industries do they invest in? Do they have anything in their portfolio which is similar to what you do? At what point do they tend to invest? Do they have experience or knowledge that may be useful to your business? If they don’t invest in your industry, or don’t invest in your stage of development, then they may not be appropriate investors for you and your business at this time.
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