Maintain your old Siemens Hipath system

Be Prepared When Business Investors Look Beyond Your Business Plan

You have spent considerable time pulling your business plan together, contacting potential business investors, making management presentations and pitching your business plan to prospective business investors. Now you finally have a serious investor who wants to conduct "due diligence" before investing real cash into your business.

Great! What's "due diligence?

Due diligence is a thorough examination of available facts, references, books, records, etc. of your business and business plan.

And, what exactly should you expect during due diligence?

Skepticism...

Business investors want to be sure there are no skeletons in the closet and that your venture is not the next Madison Priest "black box technology" -- a revolutionary technology that claimed to allow ordinary phone lines to transmit data into people's homes at rates faster than fiber optics. By staging impressive demonstrations, Priest convinced private business investors and seasoned companies, such as Blockbuster and Intel, to invest money in his venture. In the end, Priest's 'magic box' was nothing but a high-tech hoax.

In addition to a detailed analysis of your financial statements, business investors will hone in on four key areas: finance, management, manufacturing, and marketing. Specific concerns in each area are as follows:

Finance

Cash. Cash is king. It's the lifeblood of all businesses - start-up or on-going businesses. Business investors know this. They will spend the time understanding your cash flow assumptions and, if you're an existing business, they'll analyze your cash management practices. Poor cash management or shaky cash flow projections are immediate red flags.

Profitability. Expect investors to compare your actual or projected gross margins from year to year. This provides a quick indicator of your historical or projected manufacturing efficiencies and pricing environment. It can also highlight potential control issues, excessive overhead, or under pricing strategies to capture market share.

Bank problems. Out of compliance financial ratios, scrutiny from banks, or suspect bank relations - personal or business - are all red flags to business investors about how you manage your financial affairs.

Outdated financials. The lack of monthly financial statements or detailed cash flow projections or, for an on-going business, statements that are not prepared on time are all indications of a loosely run operation or a lack of planning.

Management

Continual crisis. Business investors watch closely for signs of weakness in you or your management team. Constant interruptions by emergency phone calls and demands for immediate decisions are signs of disorganization and lack of management.

Substantial changes in key personal. Unusual turnover in key management positions can be viewed as a lack of leadership.

No changes in senior management for many years. An established company with little or no changes in the management team can indicate a stagnant business, not current in new methods or processes, or a very autocratic management style.

Lack of pride or enthusiasm. Seasoned business investors can just sense the true tempo and spirit of an operation and its management team. Ask them how they do it and they'll tell you it's a sixth sense or gut feel. Nonetheless, it is something they are looking for and expect to see and feel.

Manufacturing

Outdate methods and processes. Your manufacturing and service methods and processes provide a quick indication of your ability to compete in the markets you serve and shift gears if the business doesn't go as planned. Even if you're a start-up, business investors will want to know the methods and processes you plan to use to manufacture your product or provide the services you plan to offer.

Rejects. If you are already in production, investors expect you to know your reject rates, the problems causing them, and the quality controls you have in place. How you handle rejects is an important issue to business investors. Remember, rejects are not limited to only production rejects. They also include missed service calls, late deliveries, and other process failures.

Just in time (JIT). Inventory is often the first place business owners and entrepreneurs get into trouble. Too much of it and you can quickly run out of cash; too little and you'll quickly start missing deliveries and losing customers. How well you manage inventory and understand it is a key strength business investors are looking for in the management team.

Sales per employee. The measure of overall productivity is a good, simple benchmark investors can use to measure your historical or projected performance against other companies in your industry. Questions like: What is it that you plan to do differently than your competitors to allow you to use the number of employees you use or plan to use? Why do you think you can earn more or less per employee than the average for your industry?

Marketing

Market share. Be ready to compare your expected market share or changes in it to your competitors. Remember to only measure the relevant markets you serve. Also, avoid justifying your market share by taking small percentages of extremely large markets. "Our projections only assume we get 1% of this billion dollar market" is one of the most meaningless statements a business owner or entrepreneur can say.

Trade shows. Investors will be interested in the activity and interest your company's booth generates at trade shows compared to your competition. Some may even want to attend and observe the next trade show you attend. Be sure to take pictures, videos and conduct customer surveys to demonstrate and support the interest and activity surrounding your booth.

New products. What is the percentage of new products or services that generate future sales? How often will new products or services need to be introduced to maintain your market position? What is your success rate with new products and services?

Business investors are constantly trying to sniff out symptoms of trouble. It's important that you never mislead or deceive them. Most investors have extensive business experience and regularly see or have seen many different businesses and industries. The questions they ask often stem from their real world experiences. That's why it is important not to get defensive by their questioning.

Be prepared when potential investors want to get behind your business plan. Use this list to conduct your own review of your business. Then, like many successful business owners and entrepreneurs, take the time to tap into the knowledge and questioning business investors have to offer to improve your business and prepare for future investor meetings.

Mike Elia is a chief financial officer and an advisor to venture capitalists and leverage buyout specialists. His business plan ebook Business Plan Secrets Revealed shows how to make your business the most appealing investment choice to venture capitalist, bankers, and other business investors. For his free business plan guide click here.

In The News:

Undersea 'blasts' recorded at same time Russia-Germany gas pipelines damaged
Tue, 27 Sep 2022 09:39:00 +0100
Mysterious leaks in the Nord Stream gas pipe network began with "powerful subsea blasts" and may have resulted from an "act of sabotage".

Qatar 'conscripting civilians and summoning diplomats from abroad' to do World Cup security
Tue, 27 Sep 2022 11:31:00 +0100
Qatar has called up hundreds of civilians - and summoned back diplomats from overseas - for mandatory military service to operate security checkpoints at World Cup stadiums.

Eleven children among 17 killed in Russia school shooting as wounded to be taken to Moscow
Tue, 27 Sep 2022 13:15:00 +0100
More than a dozen children wounded in a school shooting in central Russia are being transferred to Moscow for further treatment.

Shakira to face trial over alleged £13m tax fraud
Tue, 27 Sep 2022 12:16:00 +0100
Shakira is set to go on trial for tax fraud after a Spanish judge approved proceedings against the pop megastar.

Lawyer facing charges in case linked to Kenya's president found dead
Tue, 27 Sep 2022 11:31:00 +0100
A lawyer facing charges at the International Criminal Court (ICC) in a previous case linked to Kenya's recently elected president has been found dead.



tikatoshop.it

Erfahrungen mit Pallhuber Wein
Agen Bola SBOBET Terpercaya

Travel in comfort and at your leisure with CT Airlink Limousine & Car Service for top quality private transportation and exceptional customer service. We operate Sedans, SUVs & Vans for CT Car Services to covering all Connecticut airports including Car Service from CT to Newark Airport , Mohegan Casino Uncasville CT, Foxwoods Casino Mashantucket CT, Manhattan Cruise Terminal NYC, Brooklyn Cruise Terminal NYC and Bayonne Cruise Terminal NJ. CT Airlink hire licensed and friendly chauffeurs who have in-depth knowledge of the Areas.

You Are Invited

Business card size works well for invitations to special events.What... Read More

Local Search and Internet Yellow Pages - A Whole NewVocabulary for Small Businesss

Buyers want both online and local information about where to... Read More

Shocking Experienced Copywriter Reveals Little-known Secrets To Closing BIG Ticket Deals!

Hogwash!That's what I say to people who tell me that... Read More

What Happened to the Money and Freedom?

Ask anyone trapped in a cubical about their entrepreneurial dream... Read More

Three Small Business Secrets to Getting More Billable Time

As small business owners we're in business to make money... Read More

More Business Card Uses

Why would you use an event pass?Event passes are often... Read More

Bad Regulators Cost Small Businesses

When a regulator finds a target to go after to... Read More

But This Is Just My Opinion

Hi, Charles...here, Your Cap and t-shirt guy From Texas. How... Read More

A Portable Trade Show Exhibit Makes for an Easier Show

You can make your trade show experience much easier by... Read More

Image is Everything - Secrets to Cleaning Car Fleets

A recent survey indicated that clean Taxi Cabs Fleets have... Read More

Designing a Franchise Training Program

If you intend to franchise your company you will need... Read More

Eight Key Steps to Selling Your Business and Cashing In

This year, some 700,000 American businesses will be sold. Most... Read More

Is Your Business Making Money?

Is your business making money? Would you know?Figuring out whether... Read More

Advertising - For Small Businesses (Part 2)

How to do itPeople skim through newspapers and magazines and... Read More

The Wrap on Ag Plastic

While driving through Pennsylvania farmland, you have probably noticed an... Read More

What Help is there for Veterans Starting a Business?

Some of the very qualities that attract people to the... Read More

Small Home Business: Ad Copy Secrets

So it's time to invest some finances into advertising your... Read More

Leveraging Business Relationships for more Profits

When should you leverage the relationship?Leveraging sometimes brings a negative... Read More

Are You Using a Chess or Checkers Small Business Marketing Strategy?

Until the day I learned to play chess I loved... Read More

Small Business Failure? Nuts!

Pardon my enthusiasm, but a large part of your small... Read More

Does Your Business Need a Toll-Free 800 Number?

Should your business have a toll free number for customers... Read More

Starting a Virtual Assistant Business

If you're organized, smart, capable and willing to work with... Read More

Leverage The Power of Publicity For Your Small Business

Your business is only as good as the number of... Read More

Small Business Success: Thriving During Change (And Landing On Your Feet!)

If I had $1.00 every time I heard someone say... Read More

Retail Customer Opportunities for Pressure Washing Companies

Pressure washing companies must look for customers in the retail... Read More