If your fledgling business was financially struggling and your guardian angel appeared in the form of a £50,000 investment offer, you would grab it with both hands, wouldn’t you?
Or would you replay in your mind the years of hard work, sweat, tears and sleepless nights that have gone in to getting the business to where it is now, thinking twice about losing full control of your brand after handing over a percentage to a potential stranger?
This is exactly what happened to Rimi Thapar, entrepreneur and founder of vegan confectionery brand, LoveRaw, when Dragon’s Den star and serial investor Deborah Meaden put forward a £50k investment proposal on the BBC show in 2017. Rimi took a huge risk and turned down the offer on national TV, but hasn’t looked back since.
If you, as a business owner, are ever faced with a life-changing decision like this, here are some important factors to consider:
Timing is crucial
Seeking or accepting investment is all about timing. Even if you’re desperate for financial support, it’s within your best interests not to rush into something that isn’t quite right for you or your business. Think ahead about what this could mean for your ideas and plans.
You don’t want to get further down the line and realise you’ve made a mistake purely because it seemed conducive at the time. Don’t let panic take over or desperation get the better of you. Stay strong and hold out until the perfect prospect comes along that works for you and your business.
Do your research
Extensive research is key. If a potential deal arises, you need to be able to enter any discussions or negotiations confidently and with your eyes wide open.
When an investor’s values and morals align seamlessly with yours and you are inspired by each other’s visions, that’s when investment can be a “game-changer”. The right investor will possess invaluable knowledge and experience within your sector, as well as the drive and resources required to grow your brand and help make you a market leader.
Finally, you can tell a lot about a company or individual from who they have financially backed before. Be sure to look into their investment history to assess the calibre of past and current business partnerships, as this may affect any decisions you make going forwards.
Value your business appropriately and honestly. Credible investors are likely to be put off if you value your business too highly, especially as there are no guarantees things will go as planned. On the other hand, don’t give too much away in the rush to secure funds. Crunch the numbers and keep your figures realistic.
As well as being credible, your business plan must fundamentally enable investors to make money. They are likely to want to see a healthy return on their investment within three years, and you will need to show how you can achieve this.
Finally, know your weaknesses. Everyone has them, so be honest and provide a viable solution to ensure they do not seriously harm or hinder the business and therefore any investment opportunities.
It’s all about people
When an investor comes on board, they will not only be investing in your company, but also you as the business owner. For this reason, how you and your employees work together and present yourselves is just as important as your business plan and financial forecasts. Any investor will want to feel confident in your abilities and comfortable that they can work with you in future.
As a business owner, you should also have your own personal checklist of the qualities that your ideal investor should possess. The individual or company willing to invest in your business should be one that you would be happy to be aligned with, regardless of financial backing. Most importantly, they should have yours and your business’ best interests at heart.