When the time comes to grow your business, you need funding behind you. Unless you’re an established business with significant cash flow, this funding is likely going to come from professional investors. But, with so many businesses out there looking to scale, they have the freedom to pick and choose where they invest their capital. If you want them to take a chance on you, you need to show that your business is investor-ready. It’s not easy, but strategic leadership can help.
Investor Readiness UK: What Does it Really Look Like?
Your business might be up, running and turning a profit, but that doesn’t necessarily mean it’s investor-ready. For UK businesses, investor readiness means that your business can stand up to the scrutiny of due diligence, which investors don’t take lightly. Before deciding to put money into a business, investors look at absolutely everything. They want to make sure that you have the strategy and vision to drive the business forward, but you also have the operational foundations and infrastructure to secure, organise and use funding effectively.
If you can’t show that you have everything organised and ready for a round of funding, they’re likely to take their coveted capital elsewhere. Here’s what your business needs to have to have investor readiness in the UK:
- Organised Financials – When an investor is putting capital into a business, they want to do so knowing that money is in safe hands. They need to see the investment as a worthwhile opportunity for them, one that’s likely to give them an impressive return. To be investor-ready, you need to have clean books, organised expenses, accurate forecasts and a clear plan for how the investment will be used. This gives investors the confidence to invest.
- Strong Business Model – To boast investor readiness, you need to show investors that you know how to make money. You need to know who your customers are, what they’re looking for and if there’s genuine market demand for what you’re providing. It’s not enough to have an innovative product or service, as investors want a guarantee that there’s a gap in the market for your specific offerings.
- Scalable Operations – When investors choose a business to invest in, they want to know that growth is on the horizon. After all, they want to get out more than they put in. But, that’s only possible if you have scalable operations. Systems and processes that can grow with the business are a key sign of investor readiness, as disorganised, random workflows are likely to fall short eventually. Investor readiness means having infrastructure that can grow and keep up with your success.
- Defined Marketing Strategy – To succeed in a competitive market, you need to have a plan for how you’re going to acquire customers at scale, and how you’ll retain them going forward. With a defined marketing strategy, you’re showing investors that you understand the market and have a plan to bring in a constant supply of leads, conversions and sales.
- Visionary Leadership – A business needs a focused and dedicated team of leaders to drive it towards success, people who can execute plans and put complex visions into action. This means being a strong leader yourself, as a business founder, but also being surrounded by experienced professionals who can deliver alongside you. In fact, having the right leadership is one of the main things investors look at to ensure you’re ready for the next stage of business growth.
4 Signs You’re Not Investor-Ready
There’s no way of hiding a lack of investor readiness. If you’re not ready, investors will see the signs immediately, leaving you struggling for funding when you need it most. Many business founders jump into fundraising before they’re ready – often due to excitement to get the ball rolling, or because there’s a gap in the market they’re keen to grab before someone else does – resulting in disappointment, disinterested investors and a dent in brand reputation.
- Vague Market Plans – You might have early traction and a fair amount of early success. But, if you can’t explain how you’ll acquire and retain customers at scale, investors will hesitate to trust you with their money.
- Lack of Financial Control – If you’re not budgeting, forecasting or tracking key financial metrics, investors will assume you can’t manage capital responsibly, making them less likely to invest. They want to know that their investment is safe.
- Overreliance on You – You might be the founder, but you can’t also play the part of an entire leadership team. Investors want to see that the business can operate without you. Otherwise, their capital is at risk if you walk away. This is why it’s so important to curate a leadership team that can keep the business running in your absence.
- No Scalable Infrastructure – If you’re still managing operations in messy spreadsheets or lengthy emails without a real system in place, you’re going to struggle when it comes to scaling. Growth without structure can quickly turn into chaos, which is the last thing investors want when they’re parting with hard-earned capital.
How Fractional Executives Make You Investor-Ready
Hiring a full-time executive might not be feasible for your business, especially in the early stages, when you’re transitioning from being a startup into a SME and money is tight. But, the need for executive expertise can’t be overlooked, especially if you’re wanting to show investors that you’re a business worth taking a chance on. That’s where fractional executives step in.
A fractional executive is a senior leader who works with your business on a part-time, contractual or project basis, bringing experience, strategy and operational insight without the cost or commitment of a full-time hire. When it comes to making sure you’re investor-ready, they handle everything from budgets and forecasts, preparing for due diligence and setting fundraising targets. They know what it means to be investor-ready, and they know what investors are looking for. They’re there to ensure your investor readiness is as strong as possible, giving you the best chance of securing funding. You can go into a round of funding, knowing you have a strong team of leaders behind you.
Why Investors Like to See Fractional Leaders as Part of Funding Rounds
When investors see experienced fractional executives on your team, it tells them that you’re building a sustainable, future-proof business, not just quickly selling a product or providing a one-off service. It shows that you have someone on board who knows how to manage capital efficiently, letting them know that their investment is in safe hands. It’s also an effective way of showing investors that you’ve purposely brought in professionals who have helped businesses scale before, so they know that they’re doing. Plus, as fractional leaders are a scalable solution, investors can see that you’re aware of not spending more than your business can realistically afford at the moment.
Fractional leaders are also the perfect strategic partners to have in investor meetings. They speak the language investors understand – with a focus on facts, data, outcomes and plans, the things investors are most interested in – and this boosts your credibility.
Don’t Leave Investor Readiness to Chance
Don’t jump into funding rounds until you’re completely ready to show investors what your business has to offer. A lot of business founders make the mistake of jumping into fundraising with a casual pitch, a handful of figures and a rough idea of what they want to achieve. Though investors might listen, you’re unlikely to convince them to sign on the dotted line. If you want someone to invest in your business, you need to show that you’re truly ready.
Investor readiness is about preparation, credibility and leadership in equal measure. As a founder, you’re the one with the ideas and the vision, but you don’t need to do it alone. By
surrounding yourself with fractional executives, you have cost-effect strategic support and expert insight to help you to prepare for funding rounds. You can strengthen your investor readiness and the likelihood of securing funding, without breaking the bank.
Book a free session with a fractional CFO to assess your investor readiness.
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