Tom Leman of Pinsent Masons lays out the essentials that investors expect to see
If you plan to expand and open your business to investors, don’t lose sight of the essentials that investors look for while you are busy generating revenue and building your brand’s profile.
Commit your business plan to writing. An investor will want to know what you said you wanted to do, whether you stuck to the task and if you achieved it.
- Financial management
Put in place proper budgeting and accounting systems and adopt good monthly reporting practices. Any investor will want to interrogate your historical performance (particularly performance versus budget) and will need the detailed financial information to do so. Better to collate it as you go along than to try and reinvent history.
- Brand protection
Take the necessary steps to register your trademarks – not only at home, but also where you believe you will be taking the brand in the future. You will not regret it.
Formalise your commercial arrangements in writing and do not give away more than you have to. Work on the basis that you will give your partners the bare minimum rights over your brand and work up.
- The right team
As the brand grows, different management and leadership skills are required to build the infrastructure for a bigger business. The skills required to establish a new brand – the vision and creativity of creating a new concept and making it desirable – are different from the skills required to deal with large warehouses, distribution, IT systems and cashflow management.
Do not be afraid of incurring the cost of building your leadership team’s skillsets, but do it thoughtfully. Model the cost and the benefits and enlist the help of people who have been there and done it before – be they an external investor, an adviser or an experienced chairman.
Have written policies to cover issues such as human resources, health and safety, and bribery and corruption. Make sure that you regularly bring them to the attention of your colleagues.
- Good record-keeping
Whatever you do, keep good records. Whether it is employment contracts, supplier contracts or leases, an investor will want to see them all. It will not only save you time looking behind the sofa, but will give an investor the impression of a well-administered business.
If you put the foundations in place as you go along, rather than leaving it for another day, you will reduce the risk of being jilted at the altar and increase the long-term value of your business.
For further information, contact:
Tom Leman, Head of Retail and Consumer, Pinsent Masons LLP
Telephone: + 44 (0) 20 7418 7146