In this blog, I want to continue the six essential areas to review before you start raising capital. The difference between getting this right before you raise capital could mean a huge difference in terms of how much you raise.
Firstly, to recap the last three points that I covered in Part 1, I shared that you must consider the areas of sales, branding, and staffing. Forecasted sales and the ability to distinguish between sticky and one-off revenue will be important. Secondly, branding matters in order to differentiate yourself. Lastly, getting the right staff to execute the plan is of paramount importance. These will be essential to iron out as you begin your pitch deck.
In this blog, I will cover the last three points to help you complete the capital raising mission:
In the entrepreneurial world, operations is not a sexy word however, it is extremely important that investors can see and believe your business runs well. This means that they understand who runs the day-to-day operations, that there are clear roles and responsibilities, and that there is team unity. Often in the start-up phase, these things are overlooked, as you are typically working hard running projects and implementing new ideas. However, to ensure that investors have confidence that it will be a well-run business, it pays to make clear how you operate, your roles and responsibilities, and your operational oversights.
Another overlooked area of consideration in the capital-raising phase are the processes and procedures of the company. Many people look at the “idea” or the “new” shiny products that exist in the start-up world and overlook the core engines that make it work. The growth must be sustainable before the right technology, platforms, and processes are in place, to ensure effective growth and maximise efficiency. While investors may somewhat forgive the lack of processes in the start-up phase, if you have these locked down and clear it will go a long way to helping convince the investors to place their trust in you.
The basis of the financial evaluation of your business will effectively decide how much you will raise, however, without taking the above into consideration, it will inevitably show in the numbers.For instance, if you don't have sticky sales, then your business will show volatility in the numbers. If you don’t have a good team, it will effectively show in the numbers through reduced sales or increased salary expenses due to high staff turnover. All of the above are essential to having good financials that will eventually lead to a higher evaluation and raising high levels of capital. The financials are essential and the base of the financials is all in the above points.
With all this in mind, I hope this will help level up your business and help your start-up. I trust that this blog helps you and if you are keen to level up your business and be part of our Phamily at MGA, feel free to contact me and we’ll get your mission to grow your business started.