Blog / Enterprise Strategy, Entrepreneurship / 6 Ways to Make Your Business More Attractive to Investors
You’ve worked hard to start and establish your business. You already have several locations and you’d like to add more, but you’ve reached a point where you may need outside capital to support expansion and growth initiatives. You’ve decided you need an investor, but you’re not sure how to position your brand to attract and engage those initial conversations.
Here are 6 detailed action steps to prepare you and make a positive impression on investor prospects. It’s well worth the 5 minutes to read!
One: Communicate a Clearly Defined Brand
Before you even connect with investor prospects, you should assess your brand identity. While this includes your logo, fonts, and colors, it is so much more than these elements. Your brand is reflected in every interaction with a customer or a supplier – every web page view, every social media post, every store visit, every customer phone call, every email, every vendor interaction, etc…
Jeff Bezos, founder of Amazon, is quoted as saying, “Your brand is what other people say about you when you’re not in the room.” While you can’t directly control what others say, indirectly, you can do everything possible to clearly define your brand, establishing:
- What you offer (tangible product/service)
- How your product/service is unique (unique selling/value proposition)
- Who you help (what defines your target personas)
- Your mission statement (what drives you today)
- Your vision statement (what drives you tomorrow)
- Your core values (what guides every decision and interaction)
- Your brand elements: logo, fonts, colors, image treatment, voice (how you communicate all of the above in a consistent, memorable way)
Reveal tangible evidence that you’ve carefully considered and live by your brand standards and identity – both externally and internally. Be able to show how your brand identity influences the day-to-day operations and interactions of your company, your team, and yourself.
Two: Establish your Digital Presence
It’s a virtual certainty that investors will research you and your company in preparation for your initial call. Knowing this, it’s important for you to make certain your digital assets are accurate, up-to-date, easy to find, and easy to navigate. This includes your website, company social media profiles, and personal social media profiles.
Your digital assets should convey all of the information outlined above, making your identity clear – visually and verbally – across all platforms. Strive for simple messaging and a consistent, easy-to-navigate user experience.
And don’t forget your personal brand! Make sure to update your LinkedIn profile, highlighting your business, your experience, your background, and your accomplishments. Make it personal, too – give viewers a glimpse into what you stand for personally.
Viewing your website, LinkedIn page, or YouTube videos could be an investor’s first impression of you. Make it count! Lean on your trusted network for an outsider’s perspective and to fill-in any knowledge gaps.
Three: Begin With Why
An investor will want to know why your business exists, perhaps even before hearing what your business does. Why did you create this company in the first place? What motivates you day after day? What is your “why” for this endeavor? Answer authentically and you’re more likely to capture their attention from the start.
Incorporate a compelling storytelling method. Everyone, including investors, loves a captivating story. Unveil your personal and spellbinding narrative on how your business came to be. Reach the investor on a personal and genuine level and there’s a good chance you’ll stand out.
Four: Show You’re an Authentic Leader Worth Following
It’s paramount for you to genuinely reveal who you are and how you lead. You want to build confidence in the mind of the investor that you are a strong and dedicated leader with integrity and grit, committed to making your business succeed no matter the obstacles. Highlight ways you’ve successfully navigated challenges in your career – whether lessons learned from failure or how your problem-solving led to success.
Keep in mind, you’re asking this person or group to invest in YOU as much as the business. Your authenticity will go a long way toward establishing trust and building a good rapport from the start.
Five: Reveal that You’re Coachable
Most investors will want a say in business direction and strategy. Knowing this, here are a couple key takeaways:
- Seek investors who have more to offer than just funds; partner with someone who can add real value to your business, whether it be through business insight, industry experience, connections, etc. You know they’ll want to have a voice, so you should ensure it’s a voice worth listening to!
- Demonstrate that you’re coachable. While self-confidence and a strong “internal compass” is important, an openness to sound ideas and advice is essential for business growth, as well as your own personal growth. After all, as a leader, especially a leader who wants to take your business to the next level, you can’t do it all. You can’t be the expert in all business functions. You can’t oversee every daily decision. You must surround yourself with trusted advisors and doers, keeping an open mind for new ideas and new methods.
Be ready to share real-life scenarios of how collaborative partnerships/relationships have led to better outcomes during your career. Be humble and open (with yourself and investor prospects) about your strengths and weaknesses.
Six: Share a Solid Business Plan
Share your comprehensive and thoughtful business plan. You should prepare this to present and as a leave-behind. For the leave-behind, keep in mind it may be shared with team members beyond those who attend your presentation. Make certain it flows and tells the right story as a standalone deck.
Just because it’s a business plan, doesn’t mean it needs to be void of personality. Make sure your business plan adheres to your brand identity while providing the facts and figures investor prospects need to make an informed decision.
But don’t just “sell” it. Be honest and frank, presenting an accurate snapshot of your company’s past and present performance, and its future potential. If performance has been negative at any point, be certain to explain the circumstances and, more importantly, what you learned from it and how you overcame or plan to overcome the challenge(s).
Your business plan should include the following sections:
- Executive Summary – A summary of all information that follows
- Company Description – An overview of the products/services you offer, your target customers, competitive advantages, and business goals
- Market Analysis – A look at the industry, industry trends and projections, competitive landscape, and target customer demographics. You’re highlighting the potential for your business within the industry. You may want to include a SWOT analysis within this section
- Product/Service Breakdown – A more in-depth look at your products/services: how they meet consumer demand, production costs, supplier relationships, profit margins, patents and copyrights, etc.
- Marketing & Sales Strategy – This is your strategic plan for promoting and selling your products/services. The four Ps of marketing come in handy here:
- Product: Clearly define how you position your products/services within the competitive landscape. This step includes identifying product features and corresponding consumer benefits and creating key messaging
- Price: How do you price your products/services? Is it a luxury, exclusive offering or will it compete on price? You should factor in any hard costs associated with sourcing, manufacturing, transporting, marketing, or servicing to ensure your profit margin is where it needs to be
- Place: Where do you sell your products/services – direct brick and mortar, direct e-commerce, wholesale, retail, etc.? Do you have plans for expanding your sales channels in the future?
- Promotion: Which channels will you use primarily to promote your products/services? I.e., word of mouth, customer referrals, point of sale, email, social media, traditional paid media, digital paid media, etc.
- Financial Performance & Projections – You’ll want to show historical financial performance as well as future projections. This section should include balance sheets, income statements, and cash flows for at least the last two years (ideally the last three to five years), as well as income and cash flow projections for the next three years (or more). You’ll want to clearly explain any assumptions and how you reach your projection figures. Also, be sure to have all of the above available in MS Excel format – it will make things a lot easier for your prospective investors, and will facilitate more in-depth discussions about your financials.
Also note – operating a lean business is attractive to investors. Often, we focus on driving revenue without carefully reviewing expense discipline as closely, but a penny saved is the same as a penny earned when it comes to valuation. “Every dollar you add to profit increases value – so eliminate excess costs,” according to Inc. “It may seem counterintuitive that you have to reduce costs in order to bring on outside capital, but showing careful financial control – and maximum cash flow – can make your company more attractive to investors. And don’t take a gradual approach: You may only get full credit in terms of a higher valuation for lower costs that have been in place for at least nine months.”
- Exit Strategy – Most investors will want to know your ultimate goal for the business, and for yourself. Do you eventually want to sell or go public? Outline your exit plan, timeline, and any target buyers.
- Funding Request and Capital Table – How much capital are you requesting from this investor? How will you leverage these funds to help you take your business to the next level? If you’ve already received investment dollars, be transparent about who your investors are, how they engage in the business/governance structure (if at all), and their percent ownership in your company. It is always helpful to include a capital table, even if the business is 100% owned by the founder/founding team.
Your business plan should demonstrate that you’ve created a profitable, repeatable, and sustainable business model. It should illustrate to investors that you’ve done your due diligence, you’re ready for the next expansion phase, and you’re open to their guidance. This is the culmination of every other step we’ve outlined.
Please keep this in mind – in the beginning, an investor is most likely interested in who you are, why you formed the business, and how you plan to grow and scale the business regionally or nationally. Be authentic and transparent, demonstrate humility, and provide examples of your leadership and critical thinking skills. Demonstrate your passion for this business. This is important because most investors won’t be interested in much else until they understand what makes you get up in the morning, what mark you want to leave, and what life you want to live. Follow these tips and you’ll be on the fast path to building a successful investment partnership, and therefore growing your business!
Are you ready to take the next step? Are you a passionate and coachable leader with an emerging business that’s ready to expand into new markets? Maybe you’ve accomplished all the steps outlined above, or maybe you need a little expert guidance to get there. Either way, if you’re ready to talk, we’re ready to listen. Let’s have a conversation on how we can impact your next phase of growth!