Accepting an investment will transform your business - suddenly, you are accountable to moneymen, not just customers. So how do you keep 'em sweet? Read on to find out.
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Getting your hands on that initial investment is a defining moment for any business owner, allowing the business to evolve from an initial idea, to a start-up to a successful – perhaps even international - cross-border company.
The benefit of bringing an investor on board extends far beyond the financial value – they will provide strong motivation and moral support as you grow your business, applying pressure where necessary to help you achieve your goals, and sharing their network of contacts and partners.
However, it is vital to strike a balance between keeping the investor happy, whilst still keeping the control that you are accustomed to. Finding this middle ground can often signal a new way of working and can take some getting used to, but it is absolutely imperative that this way of working is perfected early on to ensure a successful and prosperous relationship.
"In business, nothing is certain, and investors are not ignorant to this fact"
An investor isn’t looking to control your business, but they do want a strong captain who can drive the business to success. By following these steps, you can cement your investor relationships and prove yourself as a worthy recipient of their dedicated time and money.
1. Change your working patterns
When an investor decides to work with your business, they will automatically want to understand the ins and outs of your company. They will want to take a look at the business in close detail and get to grips with each different aspect - after all, they are spending their money and devoting their time to your brainchild. However, this is not the only time that you need to keep the investor updated on the nitty gritty of your business.
2. Crunch the numbers
Monthly reports must become second nature, and you will need to dedicate your time to making these documents thorough and insightful. This is not a task that is generally required of a sole business owner, and may prove slightly tedious on paper. But, it is essential that these reports become a part of your business routine.
These must present the overarching numbers, like revenue and profits, but must also include the more detailed figures, such as any expenses claimed.
3. Be accurate
As a part of these reports, you must provide fair and accurate representations of the business. If a decision made has resulted in lower than expected profits, you must explain why this decision was made in the first place, and how this will affect the business in the long run.
As the sole owner of the company, you might not be accustomed to having to explain your actions and decisions, but with an investor on board it is important to share your decision making processes. It might even be worth employing a business analyst to complete the reports fairly and accurately if this is a task that is proving difficult.
Investors love numbers so make sure yours are accurate and up-to-date
4. Understand their needs
Whilst generating a profit and expanding the business are your primary concerns, an investor will also have worries of their own. They will also have strict monthly goals and targets, and it is important to honour these too. By understanding these, you can work together to negotiate the best long-term objectives for the business.
5. Don’t hide the details
In business, nothing is certain, and investors are not ignorant to this fact. Unforeseen circumstances can crop up at any time, but honesty is important in these situations. Investors hate bad surprises, so inform them of any changes as soon as possible - you can risk losing their understanding if you don’t work in this manner.
Equally, don’t hide details in the hope that you might find a solution before they catch wind of the problem. Be upfront and honest about any issues, and provide a detailed plan to overcome them. This will help to form the foundations of a transparent and considerate relationship.
After building up your business from the very spark of an idea, it can often feel like a big ask to have to alter the way you work to satisfy another person. But it is always important to remember that your investor has placed money, and dedicated time, into your company, so a little give and take is needed. By making these changes and cementing your investor relations now, who knows how far your business could go in the future?