Last blog we wrote about the top things you need to do in order to be heading in the direction of having your business be considered as an ideal investment. This week we thought we’d take that a little further and look at what investors and buyers look for, in greater detail, when they’re considering your business as their next investment.
If it’s a start-up – they want to see;
* Proof of concept. Anyone can have an idea – but turning that idea into a salable reality is another thing.
* You know your numbers. How much does it cost to manufacture or produce your product or service and how much can you sell it for? How long will it take you to break-even. And how much longer again will it take to reach profit? And most importantly – what kind of investment you need to reach the next step in your business.
* You have an actual market. If you haven’t sold anything yet, how does the investor know they’ll get their money back? And the fact that your friends and family love your idea really doesn’t count. Find real customers, stockists, fans, etc pronto.
* You’ve thought through your approach to marketing (and building your customer funnel) – and no it’s not just about having a website, as important as that is – it’s so much more than that.
If it’s an ongoing concern that you’re selling, buyers will want to see;
* The business is more than just you – ie: if you walked away tomorrow, the business wouldn’t feel it a bit. How much leverage is in your business?
* You know your numbers – How much does it cost to manufacture or produce your product or service and how much does it sell it for? How long do you take each year to break-even? What are your fixed costs vs variable costs?
* Good solid sales transaction records – yep – customers are critical here too. They’ll want to make sure you don’t have too few eggs in too few baskets. The more customers, across more products/services – the better you’re likely to fair. That way, if one is lost along the way (during changeover), the less it’s likely to hurt the business overall.
* Solid customer pipeline – this is the backbone of all ongoing concerns. If you don’t have new business tracking through your business development pipeline, best get some and quick.
* Consistent profit levels – going back at least three years. If you don’t have that – don’t even consider selling as you’re considerably less likely to get the kind of sales price you’re after.
* The business has no outstanding tax liabilities or pending legal cases – that’s just asking for trouble for a buyer to be taking on. Fix these first before putting your business on the market.
That’s just the tip of the iceberg – but if you’re looking to invest in a business, get investment in your business or you’re looking to get your business ready for sale, we’d be delighted to talk you through what you need to know and do in greater detail. You can call Kerry on 6023 1700, drop us a note or connect with Kerry via LinkedIn.
