You’ve spent lots of time pulling your strategic business plan together, contacting potential business investors, making management presentations and pitching your strategic business plan to prospective business investors. You now finally possess a serious investor who would like to conduct “researchInch before investing actual money to your business.
Great! What’s “research?
Research is really a thorough study of available details, references, books, records, etc. of the business and strategic business plan.
And, just what in the event you expect during research?
Skepticism…
Business investors wish to be sure there aren’t any skeletons within the closet which your venture isn’t the next Madison Priest “black box technology” — an innovative technology that claimed to permit ordinary phone lines to deliver data into people’s homes at rates quicker than fiber optics. By staging impressive demonstrations, Priest convinced private business investors and seasoned companies, for example Blockbuster and Apple, to take a position profit his venture. Within the finish, Priest’s ‘magic box’ was only a higher-tech hoax.
Additionally to some detailed analysis of the fiscal reports, business investors will sharpen on four key areas: finance, management, manufacturing, and marketing. Specific concerns in every area are listed below:
Finance
Cash. Funds are king. It is the lifeblood of companies – start-up or on-going companies. Business investors know this. They’ll take the time understanding your money flow assumptions and, if you are a current business, they’ll evaluate your money management practices. Poor cash management or shaky income projections are immediate warning flags.
Profitability. Expect investors to check your own personal or forecasted gross margins from year upon year. This gives a fast indicator of the historic or forecasted manufacturing efficiencies and prices atmosphere. It may also highlight potential control issues, excessive overhead, or under prices ways of capture share of the market.
Bank problems. From compliance financial ratios, scrutiny from banks, or suspect bank relations – personal or business – are warning flags to business investors about how exactly you manage your financial matters.
Outdated financials. The possible lack of monthly fiscal reports or detailed income projections or, to have an on-going business, statements that aren’t prepared promptly are warning signs of a loosely run operation or too little planning.
Management
Continual crisis. Business investors watch carefully for indications of weakness in you and your management team. Constant interruptions by emergency telephone calls and calls for immediate decisions are indications of disorganization and insufficient management.
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