If you’re looking for external funding to grow your business, you need to make sure you’re investment ready. This means you have a clear and compelling proposition for potential investors, a solid business plan, and a realistic valuation of your company. But how do you achieve this? Here are some tips to help you prepare for the fundraising journey.

1. Know your target market and value proposition

Investors want to see that you have a deep understanding of the problem you’re solving, the market you’re serving, and the value you’re creating. You should be able to answer questions such as:

• • Who are your customers and what are their needs and pain points?

• • How big is your market and what is the growth potential?

• • What is your unique selling point and competitive advantage?

• • How do you acquire, retain, and monetise your customers?

You should also have a clear and concise elevator pitch that summarises your business idea, your target market, and your value proposition in one or two sentences.

2. Develop a realistic and scalable business model

Investors want to see that you have a viable and sustainable way of generating revenue and profit. You should be able to demonstrate how your business model works, what are your revenue streams and cost drivers, and what are your key assumptions and risks. You should also have a financial forecast that shows your projected income statement, cash flow statement, and balance sheet for at least the next 12 months, preferably three years. Your forecast should be based on realistic and verifiable data, and include different scenarios and sensitivities.

3. Build a strong and diverse team

Investors invest in people, not just ideas. They want to see that you have a capable and committed team that can execute your vision and strategy. You should be able to showcase the skills, experience, and achievements of your co-founders and key employees, as well as their roles and responsibilities. You should also highlight any gaps or weaknesses in your team and how you plan to address them. One way to strengthen your team is to appoint a non-executive director (NED) with relevant expertise and connections.

4. Appoint a non-executive director with finance skills

A non-executive director is a board member who is not involved in the day-to-day running of the business, but provides independent oversight and strategic guidance. A NED with finance skills can bring many benefits to your business, such as:

• • Providing financial acumen and experience, which can help you improve your financial management, reporting, and controls.

• • Offering advice and support on fundraising, valuation, negotiation, and due diligence, which can help you secure the best deal and terms for your business.

• • Enhancing your credibility and reputation, which can help you attract more investors, customers, and partners.

• • Challenging and mentoring you, which can help you grow as a leader and entrepreneur.

Stepchange Business Growth offers these services across the North East of England and throughout the UK. You can find out more here.

5. Do your homework and research potential investors

Before you approach any investors, you should do your homework and research their background, portfolio, preferences, and criteria. You should look for investors who have a track record of investing in your industry, stage, and geography, and who share your vision and values. You should also prepare a list of questions to ask them, such as:

• • What is your investment thesis and strategy?

• • What is your typical deal size, structure, and terms?

• • How do you evaluate and select potential investments?

• • How do you support and add value to your portfolio companies?

• • How do you measure and report on your impact and returns?

By doing your homework and research, you can save time and effort, and increase your chances of finding the right investor for your business.