When you’re trying to raise equity, it’s important to plan for future expansion. Potential investors will want to see that you’re in a good position to grow your business and expand into new markets. The path to expansion will look different for every business, but there are a few mainstays that apply to all industries and common mistakes to be avoided.
Whether you’re an e-commerce start-up or an established brick and mortar retail store, here are some things to keep in mind as you prepare for the next phase of growth.
1. Not clarifying your sales pitch
Can your business be explained in under 20 minutes? Your growth potential depends on the clarity of your marketing. If people don’t understand what you’re selling, they are unlikely to convert. Do your best to refine your brand messaging so you can succinctly and convincingly sell your business to everyone from potential customers to potential investors.
2. Not putting your ideas to the test
Has your growth strategy been independently tested? Investors will want to see evidence that your strategy is viable; they’re not investing in your optimism, they’re investing in your business. Make sure the facts and figures about your estimated growth are based on sound research. Not only will this reassure investors, it will also give you the confidence to pursue your business goals with gusto.
3. Underestimating the realities of expansion
Scaling a business isn’t easy; if it was, everyone would do it! Before pitching a business idea to investors take some time to reflect on your goals and consider whether you are ready to take your business to the next level. Expansion may require long hours and potentially some overseas travel. Are you prepared to put in the time away from home in order to grow the business into new markets? Are you willing to travel intensively? It’s okay if your answer is ‘no’ or ‘not right now’; what matters is that you adjust your goals accordingly so that you don’t give investors the wrong idea.
4. Losing sight of KPIs
Key performance indicators (KPIs) are a good way to assess whether or not the business is on the right track for success. If you don’t already have these in place, consider implementing them throughout all levels of management so you can keep an eye on the performance of your team. If you do already use KPIs, take some time to review where things are going right and where things are going wrong, so that you can focus attention where it’s needed to make the necessary improvements.
5. Not involving your accountant
It’s a good idea to speak with your accountant whenever you’re planning to grow your business. An accountant can make sure all your finances are streamlined and that you’re complying with your tax obligations. If they're any good, they will also be able to offer some suggestions for your growth strategy, particularly in regards to funding, raising equity, and budgeting. We'd also recommend consulting a lawyer before signing any formal agreements.
