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PRO INSTALLER DECEMBER 2016
PRO BUSINESS
@proinstaller1
THE RISE OF CROWDFUNDING
Raising finance for your business can be a stressful process and it’s not as easy as it once was. With banks lending
to businesses less, it can be a struggle to reach the growth and potential you’re looking for. As the alternative
finance market grows, business owners now have another avenue to try. Equity crowdfunding for businesses has
exploded and has helped fund successful enterprises such as Brewdog and Mondo Bank. It can be a fairly long
process and will require more time than a standard business loan, but here are some tips as to where to start.
THE PLAN
THE BUZZ
Firstly, you need a clear
plan. What are you going
to achieve? How you are
going to achieve it? Who
is going to achieve it?
All of these questions
need to be addressed in a
well-structured business
plan. Fifty-page documents are not always the
best route. Investors and
equity crowdfunding platforms can be turned off by
this and it becomes, well,
just a bit boring.
You need to be short,
snappy and smart about
what is included in your
business plan. Think
about what you are writing and some it up in the
most efficient, yet informative way. You should
be including your vision
and mission, details of
the product and service
you are offering and why
this differs from what is
already available in the
market.
Next, the management
team. This is very important. How is the team
qualified to guide the
business and what past
experiences do its members have that will drive
the business forward? Explore cash flow forecasts,
what you are expecting
from the business and
how much it will make
once you have received
investment - be realistic
here. How are you going
to market the product?
Competitor analysis is
important. Don’t be afraid
to be innovative with your
plan, try and stand out
and give it some sort of
edge. After all, you are
trying to attract investors
to invest in YOU - so what
separates you from the
rest?
You’re excited about
your business right? You
trust that it’s a great idea
and you believe in it, now
it’s time to make everyone
else feel the same. Potential investors need to be
as excited as you. A good
place to start is a short
video to highlight your
strengths as a business.
Make it fun, short and
sweet. Also, get yourself
online and on social media. Showcase your work
across Twitter, Facebook
and Instagram and engage
with your customers and
potential users. It’s a great
(and FREE) marketing
tool to get your business
known and visible, and
with the option for a
paid ad service you can
increase your marketing
even more. Create a build
leading up to your funding
round. Create some noise
around it and why it’s so
exciting and exclusive.
PLATFORM
EQUITY OFFERED
AND VALUATION
This can be a tough
one to figure out and will
require a lot of thought.
You have to consider how
much of your business
you are willing to give
away. As well as that, if
you are planning on multiple funding rounds, you
need to save some equity
for the future. Firstly, you
will need to get your
valuation straight. If you
are going to offer 25% of
your business for £250,000
then you have valued your
business at £1m. Is that a
reasonable and justified
sum?
You cannot simply pick
a value you wish to raise
and only offer a small percentage of equity. It needs
to add up and valuing
your business will play a
huge part in what you can
look to raise. Remember,
your figures have to be
justified. When valuing
your business you need
to consider the value of
the assets, the cash in the
business, discounted cash
flow for future projections,
the valuations within the
industry, the current profit
and loss, the revenue and
the projected sales as well
as the value in your existing staff.
Again, you need to be
realistic. Valuing yourself
too high will make investors less likely to invest
as they will be expecting
a higher share for their
cash. Be reasonable but
also be comfortable with
the amount of equity you
are giving away.
The equity crowdfunding
market has grown at such
a huge rate and there are
now a number of great
platforms to choose from.
When it comes to picking
a platform to raise with,
look at what suits you
the best. By this I mean
look at the charges, what
percentage the platform
will charge from your
raise and do they also take
a share in your business.
Do your research, consider
the types of businesses they have previously
funded and what type of
investors they are likely
to have. Try and find a
platform that suits your
needs and also is likely to
be the most relevant for
your business.