In small business (1), growth typically comes organically: winning new customers, expanding into new territories, or establishing new partnerships. Inorganic growth, growth from a merger or acquisition, is more unusual. Failure rates for acquisitions or mergers are reported as high as 90%. However, at times, organic growth opportunities can seem too complicated when a growth opportunity requires an investment. So, even though you have reached a level of success and feel confident in your ability to make a success of a new opportunity, you can still be stuck at the starting line.
In my earlier article 3 Strategies for Business Growth - Use Your Business Plan, I identified securing resources as an ideal candidate for using your business plan as a way to fuel growth. In this article, I will take you through the 4 steps you need to prepare to win the investment funds for growth.
Entrepreneurs or small business owners are notoriously conservative with financial risk. Understandably to my mind, they have made their business successful at great personal cost. They know when things start going south, they pay the price. How can you increase your confidence in taking the next big leap by securing the investment required?
Today, access to capital is expanding for the small business sector, but gaining access to it will require both solid financials and a strong plan.
If you have a great growth idea that needs an infusion of capital, take these steps to prepare to secure it and get off the starting line.
Step 1: Research
Detail your business growth strategy and research the market thoroughly. Make sure you spend the time necessary to conduct new market research, don’t just depend on what you think you know. Focus on competitors’ business model and marketing approach. Use the web, your network, and direct outreach to find out all you can about their approach and what will be required to compete against them.
Step 2: Draft your Plan
Draft your first pass of a new business plan with financials and prepare a presentation to test it. Ask a true friend or business associates you trust to sit through your presentation and provide feedback as a possible investor. Ask them to tear it apart and take notes on how they have taken in your pitch.
Step 3: Define your Funding Strategies
Update your plan given the feedback and define your funding goal. How much of an investment do you need to execute your plan successfully? Research the various sources you could use to get this funding. Today there are new, non-traditional sources of funding that you could explore. Look at crowdfunding and online lenders in addition to the traditional lending options. If you are comfortable, explore equity stakes. Find out the costs and constraints of these sources and create a plan with a mix that means your success is not too dependant on one source.
Step 4: Finalize and Start Pitching
Update your plan, tighten up your key points and run through your presentation. Go back to those that you shared your draft with and run through it again. Finalize it and start applying to win starting with the most favorable sources first.
You are now off the starting line and in the race to fuel your growth. The updates will be frequent and mostly minor if you have done your homework.
Want to develop your best thinking? Enroll in Strategy Class™ or sign your team up for a Strategy Boost™ We can help shape your thinking and increase your chances to win the resources you need to fuel your next stage of growth.
Call us today to find out which option is best for you.
Footnote: (1) The Bureau of Labor Statistics defines a small business as a firm with 1 – 249 employees.