When talking with investors, they’re focusing on what figures you did last year, which may have been $0.
You as the entrepreneur are focused on what you’re going to do in the coming years.
When it comes to valuing your company for the purposes of raising capital or selling your business, there is a disparity between what the investor sees and typically what the entrepreneur sees. The investor is trained to look at past performance, while the entrepreneur inevitably looks to the future with determined optimism.
So how do we do we put this argument forward?
By making the future real.
Proof of concept is high up there on the “to look for” list for investors. What have you done in the past that helps me believe you will be able to achieve what you’re projecting for the future?
What contracts are in play that secure your key customers or clients for the coming 12 months? Who is engaging your services currently that would be happy to be put on a 12 month arrangement in exchange for a small saving or bonus?
Strategic partnerships are mutually beneficial relationships between two companies that drive each other business. For instance, if you own an accounting practice, could you establish a relationship with a legal practice in the same area and put in place a cross-pollination relationship?
Who are some complimentary businesses that would be happy to send their clients your way if they were adequately incentivised to do so?
Gaining leverage and cut-through in the media is great for a businesses profile, but more importantly it’s great for a businesses bottom line.
Put yourself where opportunity can see you.
Can you establish a presence in the media that sees you as a regular contributor to different media outlets or blogs? Knowing that this business is going to be a visible player in the market helps instill confidence in any potential investors.
When investing into private companies, investors are all too aware that it is a risky and speculative investment. The main question on their mind is not “how much money can I make?” but rather, “how am I going to lose my money?”
By making the future real, an entrepreneur can minimize this resistance by demonstrating there is real growth potential, yet to be exploited, inside this business.