Detailing Business Management Forum- Linkedin TAKING on an INVESTOR, by Bud Abraham Just this week I had two detail business owners call me asking for advise brining in an investor into their detail business. One owner was looking for expansion money and had a couple of investors he wanted to approach. The other was approached by a wealthy customer who offered to help him expand an grow the business. Both great opportunities, but unfortunately neither detail business owner had a clue on how to speak the "investor's language," and it is a language, simple but a very distinct language. That is the language of ROI. Return on Investment. To bring in an investor into your business is a very important decision you will ever make. You must weigh the loss of control you will incur. But if you have growth ambitions, outside funding is a necessary condition for your success. So how do you prepare your detail business so it is attractive to potential investors? Here are some suggestions: 1. Have audited or CPA reviewed financial statements for the past 3 years 2. They want to see profit so anything you can do to add profit to the bottom-line is critical. Eliminate as many costs as you can to increase the profit of the business. 3. Insure that you stated objectives for taking on an investor (s) matches your personal objectives. 4. Have a well-laid out strategic plan that reflects the business can and will grow with the additional funding 5. Insure that company leadership is in place (obviously you and any other key people in your group) ideally a company should grow and flourish with you not having to be there every day. 6. Hit or exceed your yearly budget numbers. 7. Don't be your company's only leader. 8. Get a good attorney to represent you. 9. Be patient A lot of work but if you want to attract investors you have to talk their language and show them a company that has potential and that is in the numbers, the plan, the people, etc. If you do not have any of that don't waste your time looking for money. For too many naive detail business owners I have talked with think that a customer who approaches them about investing in the company is just doing so to "give the detailer a job." Wrong, the investor customer sees potential and expects that you are a savvy business person and will have things in order to grow the business, that is why they approach you in the first place. If you do, then you will have success, if you don't then the investor will loose interest or if it is someone you are approaching they won't even have an interest. ROI - any alert investor can make 10% to 20% on their money so if they invest in your detail business to grow it they will expect to make a minimum of 10% return on their investment and most likely more. That means if they invest $100,000 in your business they want a minimum annual return of $10,000 to $20,000 otherwise they will not invest.
