In anticipation of the end of the covid period and a return to normal "new" life, companies are noticeably worried about the future. Various development scenarios can be predicted, but the need to attract funding will certainly remain. E. Ragels propose to consider a set of measures that will help entrepreneurs to effectively adapt to market requirements and successfully attract funds.
Refine your development strategy
The first task is to analyze and refine the company's development strategy. Typically, the horizon for planning a corporate strategy is chosen for 3-5 years. But with significant changes in the market, the previously developed strategy often becomes outdated, and what needed to be done tomorrow becomes the problem that needed to be solved yesterday. It is necessary to update the strategy in the field of the selection of key products or services, target markets, key customers, marketing and advertising policies. The company can also be more flexible in assessing potential business threats and adapting to new market demands.
Determine your funding needs
The next step is to determine the need for funding. This requires a financial forecast based on the company's development strategy. The forecast should include three forms of financial statements: profit or loss statement, balance sheet and cash flow statement. It is the balance sheet and cash flow statement that will give a clear idea of the required amount of financing. This is especially important if the company's development plans involve significant investments in fixed assets.
Select the form of attracted financing
A very important decision in the process of raising funds is the choice of the form of financing. As a rule, the choice is made between loans and capital investments. Each of these forms has advantages and disadvantages. Now, at a time of negative interest rates, most companies seek to obtain a bank loan as the cheapest form of financing.
However, bank loans are available only to large enterprises with stable businesses. For start-up companies, the main source of funding will be capital contributions from owners or investors.
Separately, one can single out large investment projects that use both bank lending and shareholders' funds. The share of bank lending will depend on the degree of investment risk of the project and can be 60 - 70% of the investment budget.
Prepare materials for investors
The success of the business will largely depend on the correct organization of communication with investors. First of all, it is necessary to prepare presentation materials that will convince investors of the attractiveness of investing in a company. Presentation materials typically include a teaser, an information memorandum or business plan, and a financial model.
This set may differ depending on the type of funding attracted. So, in the case of attracting a bank loan, the company usually provides a business plan and financial model. When it comes to attracting capital financing or implementing an investment project, the company prepares a brief description, an information memorandum and a financial model.
Start your search for investors
The final stage is the search for investors. It begins by preparing a list of potential investors, often referred to as the “long” list. It includes the name of the company-potential investor, name, position and phone numbers of the contact person. As you communicate with the persons involved in the "long" list, it is reduced to the so-called "short" list. In this group of the most probable investors, it is necessary to find the one who will offer the most favorable conditions.
The article has been translated from Russian. Source: Открытый город