Here are a few questions that you should ask yourself before you decide whether or not equity finance is right for you:
#1 Is your company a registered limited company?
If you want to take full advantage of equity finance, then you will have to have a registered limited company. This will allow you to allocate company shares to the investors that are outside of the company. If you don’t know if you should move to a limited company structure, then you will want to weigh the pros and cons.
#2 Is your business plan current?
Having a business plan is a very important thing for small businesses when it comes to getting financial assistance. You will want to keep this plan up to date to ensure that potential investors know what is going on with your financial state.
#3 Are your financial forecasts up to date?
In your business plan, you will want to include financial forecasts for the next 3-5 years. This will really help when it comes to securing the external financial support that you need. Investors will want to understand more about the return on their investment that they should expect should they decide to put money into your business. Make sure that all of your forecasts make sense and that you can back them up 100%.
#4 Do you know exactly what you are going to do with the money you receive from investors?
Some businesses want to find investors to put money into their business before they really even know what they are going to do with the money. This is never a good idea. You should have strategic and specific plans for the money when your investors ask- and they will.
#5 Do you have a good management team?
Your management team will need to be an asset to your company. Any external investors will want to make sure that your management team has what it takes to work out any issues that may arise. They will also want to know that the team has experience and credibility.
#6 How Clear is Your Exit Strategy?
No matter where you are with your business, you will want to make sure that you have a clear exit strategy in mind. Investors will want to invest in companies that have a focus on the future. Having an exit strategy will show them that you mean business. It will also give them an outlook on the future of your business.
#7 Can you make the perfect pitch?
If you want someone to provide you with equity finance, then you will want to know how to pitch your business to your potential investors. If you are unsure about how to go about your pitch, you may want to get the help of a professional.