{"id":28183,"date":"2017-11-16T10:10:37","date_gmt":"2017-11-16T10:10:37","guid":{"rendered":"https:\/\/www.clearbooks.co.uk\/blog\/?p=28183"},"modified":"2018-11-08T11:36:32","modified_gmt":"2018-11-08T11:36:32","slug":"investment-101-prepare-sme-investment","status":"publish","type":"post","link":"https:\/\/www.clearbooks.co.uk\/blog\/investment-101-prepare-sme-investment\/","title":{"rendered":"Investment 101: How to prepare your SME for investment"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">When you start a business, investment can seem such a remote possibility that you don\u2019t even consider it. But fast forward a few years and suddenly it\u2019s not so far off your radar. Whether you\u2019ve created a new system or product and need investment capital to develop it or it\u2019s simply time to expand, seeking investment can be a great way to take your business to the next level.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That being said, it\u2019s certainly deeper waters than most SME owners navigate in their day to day. While it\u2019s tempting to see investment capital as free money, it\u2019s important to remember that the money comes with people attached. And that can lead to some complications when it comes to deciding on the direction of the business \u2014 not to mention the legal and financial headaches that can occur if you can\u2019t make a return on the investment.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So how can you give your business the very best shot at securing investment and make the most of it when you get it?<\/span><\/p>\n<h2><b>First, get a sense of what investors are looking for.<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">It\u2019s not all that hard to find investment, but it is important that you know how to make your business as attractive to investors as possible so you can secure the best deal for your situation. Investors tend to pay the most attention to these four things:<\/span><\/p>\n<ol>\n<li><i><span style=\"font-weight: 400;\"> The business\u2019s strategy, both in general and for using the investment.<\/span><\/i><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">Investors don\u2019t want to sink money into a business with no clear plan, so the clearer you can make your plan for the business overall, as well as your plan for how you\u2019re going to use the money and provide a return, the better.<\/span><\/p>\n<ol start=\"2\">\n<li><i><span style=\"font-weight: 400;\"> The past performance of the business and key staff.<\/span><\/i><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">If your business hasn\u2019t been performing very well or running very long, you\u2019ll likely find it difficult to secure investment. Similarly, if you have a high staff turnover rate or you\u2019ve just brought in new people for key positions, investors may not be as excited to get on board. That being said, if you have a track record of success with a previous business, you may be able to secure investment even if the business is new or in transition.<\/span><\/p>\n<ol start=\"3\">\n<li><i><span style=\"font-weight: 400;\"> How well you\u2019ve dotted your \u201cI\u201ds and crossed your \u201cT\u201ds.<\/span><\/i><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">You need to have all of your legals and finances sorted well before you seek investment. This includes contracts with your staff, suppliers, and key clients, as well as things like HR systems, protection from common liabilities, etc. Nobody wants to be left on the hook because you cut corners with your paperwork early on.<\/span><\/p>\n<ol start=\"4\">\n<li><i><span style=\"font-weight: 400;\"> The market.<\/span><\/i><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">Investors keep a keen eye on the current market dynamics; the better things are going in the market, the better chance you\u2019ll get investment. Similarly, if things are projected to go poorly in the market, particularly in sectors that affect you, you\u2019ll probably find it harder to get investment. People looking to invest are always weighing up the potential downsides. What happens if it doesn\u2019t work out? What if they don\u2019t get a return on their investment, or worse, they lose money because the company goes belly up? The bigger the risk, the less willing people typically are to invest.<\/span><\/p>\n<h2><b>Next, take steps to make your business as attractive as possible.<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Those four things that investors look for? They can also form the basis of your investment prep checklist. Make a list of all the things you can do to speak to those four things, and then do them.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This could include:<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u2014 Coming up with a clear business strategy, or revising your existing one.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u2014 Working with a business advisor or accountant to create an investment strategy.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u2014 Tracking your business\u2019s performance to demonstrate a record of success.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u2014 Signing longer contracts with key members of staff.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u2014 Reviewing all of your legal documents (incorporation papers, trademarks, contracts, etc.) and making sure they\u2019re all in order. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u2014 Pulling all your tax and financial papers and having your accountant review them for irregularities, then working with your accountant or business advisor to create a summary that investors can easily reference.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u2014 Including contingency plans for changes in the market in your investment plan.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u2014 Proactively addressing potential risks: are there things you can do to reduce the potential downsides of investing?<\/span><\/p>\n<h2><b>Now you\u2019re ready to start the process of investment prep.<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Once you have all these things sorted, you can start what most people think of as investment preparation proper. This includes getting your business valued by an accountant, coming up with an investment proposal that you can tailor for each investor you approach, and preparing all the legal and financial documents required for signing investors.<\/span><\/p>\n<h2><b>If it sounds like a lot to do before you ever start seeking investment, it\u2019s because it is.<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">But the time and energy you put into understanding what\u2019s required for investment and getting your business investment-ready will pay off big time when you actually start approaching investors. And don\u2019t forget, you don\u2019t have to do this on your own. (In fact, you shouldn\u2019t.) Your accountant can be one of your best allies in this process, so make sure you\u2019re calling on them!<\/span><\/p>\n<p><a href=\"https:\/\/www.clearbooks.co.uk\/blog\/\"><i><span style=\"font-weight: 400;\">Love actionable business advice for SMEs from accountants who get them? Check out our archives!<\/span><\/i><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>When you start a business, investment can seem such a remote possibility that you don\u2019t even consider it. But fast forward a few years and suddenly it\u2019s not so far off your radar. Whether you\u2019ve created a new system or [&hellip;]<\/p>\n","protected":false},"author":145,"featured_media":28185,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-28183","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Investment 101: How to prepare your SME for investment | Clear Books<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.clearbooks.co.uk\/blog\/investment-101-prepare-sme-investment\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Investment 101: How to prepare your SME for investment | Clear Books\" \/>\n<meta property=\"og:description\" content=\"When you start a business, investment can seem such a remote possibility that you don\u2019t even consider it. 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Whether you\u2019ve created a new system or [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.clearbooks.co.uk\/blog\/investment-101-prepare-sme-investment\/\" \/>\n<meta property=\"og:site_name\" content=\"Clear Books\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/clearbooks\/\" \/>\n<meta property=\"article:published_time\" content=\"2017-11-16T10:10:37+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2018-11-08T11:36:32+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.clearbooks.co.uk\/blog\/wp-content\/uploads\/2017\/11\/invest.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1500\" \/>\n\t<meta property=\"og:image:height\" content=\"828\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"David Carr\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@ClearBooks\" \/>\n<meta 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