If you are looking to borrow money for your business then the last thing that you need is to have to visit multiple potential lenders before somebody says yes. It is for this reason why you have to ensure that you are fully armed with all of the information that a potential investor may be looking for. A good friend of mine works for the lender Sertant Capital, which helps businesses to secure funds for new equipment. One of the most surprising things which he talks about when it comes to people looking for money is just how few of them come in armed with the right information pertaining to their business.
Of all the information required, you have to be able to talk about your figures and this is exactly why this is important.
Understandably an investor is going to want to know why you need the money and what you are going to spend it on. In order to do this, you have to be able to talk about what your company is worth, how much money it makes and how much money it spends. An investor is never going to give money to a business that is not doing very well, and it certainly won’t give any money to a business person who does not know the ins and the outs of their own business.
The biggest reason why investors want you to know your figures is that they want to know how and when they will get their money back. If you say that over the course of the next five years you will seen an increase in sales and revenue of X amount and you can explain why, then this gives the investor confidence that they will see a return on their cash. If however you cannot explain how you will get that money back to them, they are understandably going to be jittery about lending any cash.
This is not like a bank loan where the bank can take legal action if you don’t pay back, the investor needs to know that they are going to see a return on their money either by way of profit or by way of a repayment. You may have a very clear understanding of how you are going to do that, but if you cannot back up that belief with figures then you are not going to get the investment which you are looking for.
Investors like a Venture Capitalist do not have unlimited funds which they can share out amongst everyone who is looking for investment and if you cannot prove that you know your figures and your business then that investor is going to look for a business and a business owner which does. There is competition for cash just like there is competition throughout the business world, so ensure that you know exactly what you are asking for and why.