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Tag: outset

  • Ready to grow? How to get in shape for investment

    Ready to grow? How to get in shape for investment

    All businesses currently face a challenging economic environment, and growth businesses are no different. Fuelling the UK’s growth economy, these dynamic businesses are perfectly positioned to seize opportunities and manage challenges ahead in a measured way.

    However, ambition alone is not sufficient. Like any company looking to scale, innovative and entrepreneurial companies must be well prepared regardless of their market segment, with robust business models in place and compelling growth prospects. Many businesses turn to external investors to provide the funding, experience and expertise needed to help them overcome financial and operational challenges and realise their ambitions.
    Investors are often well positioned to continue investing throughout the economic cycle, forming long-term partnerships with companies and supporting them over time as they grow, providing consistency and continuity despite the challenging backdrop.
    With the investment climate proving more challenging, and investors understandably scrutinising every last detail of a deal, it’s essential that growing and ambitious businesses are ready to approach the market with every I dotted and every T crossed.
    Securing investment for the next stage of a business’ growth takes preparation and, the truth is, few are investor-ready from the outset.
    The first step is to consider what investors look for in a business. Generally, they want a  strong management team, good financial performance and a well-thought-out growth plan, among other things.
    Businesses typically seek investment to finance growth through expansion, which may include research and development into new propositions, new plant and equipment, hiring people or to finance the costs of launching in a new market. Alternatively, the investment may be required to fund growth using a buy-and-build acquisition strategy.
    Whatever the motivation, there are a number of key things to consider when preparing for investment:

    Growth plans

    Whatever a business’ growth strategy, it should be underpinned by a detailed step-by-step plan, which should be supported by as much evidence as possible. Many companies struggle to articulate what their business’ USP is and how they will scale to the next level. Easy access to management information and business data is also vital in proving the case for funding, as is the ability to refine your business and set KPIs that will help to drive business growth.

    People

    An investment is a relationship, and relationships depend upon people. A robust growth plan should identify the leadership, technical and professional skills of the top team. Investors must have confidence that a business has the right people to deliver their growth plan. After all, people are the bedrock of success for just about every company, and a strong management team (without exception) must all have the ability to inspire and lead.

    Credible financial plan

    The due diligence stage of the investment process is crucial for determining success or failure. If financial accounts and supporting analysis are in the wrong format, insufficiently detailed, or in any way non-compliant with legislation, no one will want to invest.

    Good data

    Gathering accurate insights about a business’ performance is critical to easily identify and respond to any problems before the damage is done. The best companies will have embedded systems and reporting tools that allow management to view financial data and in real time. Another benefit of having robust data at your fingertips is in helping to maximise profitability.

    A sustainable proposition

    Business models based on short-term trends and crazes, will often enjoy short-term success but risk stagnating as interest wanes over time, or excess supply comes into the market. Investors will look to invest in strong concepts with proven longevity, to ensure customers will come back time and time again.

    Scale

    It’s one thing to find a couple of good sites and operate them well, it’s another to replicate that success at scale. If you’re a growing multi-site business you need to have appropriate team structures in place, allowing decision making and responsibilities to be delegated. It also needs fit-for-purpose back-office systems and software. This can become challenging the further you move away from your heartland. Another key point on multi-site businesses is ensuring you can demonstrate short payback periods and return on capital. When a business is expanding, investors want to see that each new site recoups its set-up costs within two to three years. If it takes longer, an investor will question whether the business model is viable in the long term.

    The right investor

    There are many investors on the market. Some have specific expertise in market sectors, some are generalists; some are known for seeking returns in a short timeframe, others are more long-term in nature. Businesses should aim to engage with those that are a good fit for their business – alignment around goals is key.

    Timing

    If everything falls into place and is aligned, a small number of nimble and well-managed businesses are able to achieve investor-readiness in a few months. However, a timeframe of at least three to six months is more common, possibly up to 12 or more if a business has a lot of work to do.

  • Startup advice for 2017

    Startup advice for 2017

    Sarah Loates, who founded her own highly successful Loates Business Solutions after two decades climbing the corporate ladder, gives her advice to businesses just starting out.
    Whatever the reason behind deciding to start up a company, there are some things that are always going to be important. Going it alone does feel like a huge, brave leap in the dark; after all, for many of us, you’re turning your back on the safety of an existing business and believing in your own instincts to make it out there. But with the right attitude, plenty of drive and planning, the huge feeling of satisfaction in making a success of your own business idea is a true reward in itself. There will be plenty of pitfalls along the way, but here is how to avoid some of them.

    Believe in yourself

    It is very, very hard to be successful in business without a large degree of honesty. Before you start, it is vital to have a good look at yourself, your ideas and your strengths, and work out what it is that you personally are best at doing. Examine your offering from every angle and make sure you’re happy with your business plan, because when you start, you will need enormous amounts of self-belief to convince others that your fledgling company is worth buying into and from. To that end, price your services fairly – don’t think that massively underselling yourself will help you get off the ground; it will simply make it much harder to put your prices up to a reasonable level when you need to.
    When it comes to your involvement in your own business, work out where you add most value and try to spend as much time as possible doing that. Understand you can’t do everything your business needs, and delegate everything else.
    When planning your business at the outset, be clear on your vision and your USP. In our case at Loates, we’re all about long-term relationships and personal service. Whatever it is you want to do differently from other companies in your field, don’t lose sight of it. As your business progresses, always know where you’re going. You will find this really helps make decisions, as you will be able to consider whether they move you towards or away from your planned objective.

    Get your tech right

    Efficiency is vital in a start-up. Everything takes so much longer at first that you don’t want to be wasting time on things that could be done quickly. Look around carefully for the best, time-saving IT systems for you, plus reliable support for those services. Also invest time in making sure you have effective financial processes in place. These are areas where you really don’t want to mess up.

    Don’t burn out

    A lot of people who set up their own business exhaust themselves by trying to do everything and burning the candle at both ends. It may be tempting in the short-term to think that working flat-out is the way to succeed, but you must remember that you are in business for the long-term. Pace yourself. Don’t be afraid to take holidays when you need them. Manage your energy on the right things and try to work on a ratio of finding 80 per cent benefit from 20 per cent effort.
    When it comes to your energy levels, you will find that recruiting the right team is absolutely key. You have a business plan so communicate it clearly to whoever you are interviewing for any job. If they buy into it, they will work much better for you than just doing as you say without any conviction.

    Think ahead

    The demands of the day-to-day will always be pressing. But you ignore the future at your peril. As the business unfolds you will see what your long-term problems may be so try to think of contingency plans in case these materialise. Hope for the best; plan for the worst.
    Following on from that, it is very important to allow some time for strategic thinking. Take some time out from the everyday for your long-term “eating an elephant” tasks. You will know the ones. The big things that you mean to get on top of, but somehow life gets in the way. Don’t let it. It’s your business, after all.

    Treat people well

    The image of the nasty business leader stepping on people on their way to the top is truly a thing of the past. Make good use of all your network of contacts and build relationships. Treat people well, play the long game and sales will follow. At Loates, the majority of new business is from personal recommendations and the majority of our clients are long-standing ones who repeatedly use our services. Go to networking events but treat them as building relationships, rather than making sales. People these days are generally wise to the “hard sell” and don’t go for it, and if you go down this route you may just come across as desperate.

    Develop critical listening skills

    It is vital to listen carefully to clients when they tell you what they want. But when listening, also ask questions so you can try to understand what their business objective is, rather than simply rushing to implement the solution that they’re asking you for. You know the marketplace, and there may be a better way to achieve the thing that they need, and you will impress by making different suggestions that show you really know what you’re talking about. One of my first questions to any client is always: “What are you actually trying to achieve?”

    Be decisive

    There is no room for dithering in business. You must be decisive. My rule of thumb is that a timely decision is better than a “perfect” one. That doesn’t mean that you must rush into things. A decision not to act is still a decision.

    Think creatively

    Don’t be afraid to try new ideas, but measure their effectiveness so that you know when they’re not working. Remember the vision of your company and test any new ideas to check they comply with your main plan. Being creative doesn’t mean being wacky for the sake of it. If your new idea isn’t working, take corrective action sooner rather than later. You should never be too proud to admit when your idea – which might have looked great on paper – simply didn’t work.
    In summary, be passionate, work hard, take time off, and find satisfaction in what you do. Running your own business is a great thing. I haven’t looked back since I set up mine.