4 steps to attract outside investment to a small business

August 18th, 2015

Once a small business has moved past the startup phase, they will need to start thinking about how they can achieve further growth. Sure, organic financing is great to start with, but there will come a point when many businesses need to attract outside investors to take their company to the next level.

To help make your company attractive to outside investment, we've assembled four areas you'll need to optimise in order to help attract the attention of a potential investor.


1) Secure your cash flow

Any investor is going to be looking for a robust, steady cash flow with multiple customers. More than any other aspect of your finances, cash flow is going to indicate whether or not your business can sustain long-term growth. For an investor, cash flow also hints at the maturity of your client base and how profitable your company will be in the future.

One option to improve your cash flow is to utilise debtor finance services. This service allows you to assign invoices to a third party who then assumes responsibility for receiving payment from the debtor. Your company will receive a portion of the invoice's value when they are first assigned, with the remaining portion received once the invoice is finally settled.


2) Introduce new accountability to your operations

Working with an investor in your business also requires companies to implement a new level of accountability to their management. This can start with their finances and a conversation with your accountant, but should extend to every aspect of the enterprise. Investors are going to want to see that a company has a professional management structure, even if it is still a small company that only has a handful of staff.

It's important to remember too that every organisation will have reached a point where they need to be more accountable and professionalise their operations. The sooner you can get your company to this state, the better its chances of growing long term and attracting investment.


3) Have a clear brand

There are a whole lot of intangibles that make your company attractive beyond the numbers you have on a balance sheet. One of the most significant intangibles that fall into this category is branding, as a clear company image will resonate with potential investors.

Building this intangible value into your business can be tricky to achieve, but is one of the broader factors that will make an organisation attractive to an investor. If people recognise your branding, it also becomes more likely that a potential investor will have heard of you and may even reach out to you on their own accord.


4) Be a strong leader

Another intangible asset for a company is leadership - both you as a small-business owner and your management team. If you are pitching to an investor or just having a conversation with a potentially interested party, your leadership style has to shine through and convince investors you are just as worthy of investing in as your company.

Being a good leader requires more than just putting on a brave face when talking to potential investors, it has to inform every part of your business. Providing a leadership example from the very beginning will translate into a strong team and a successful enterprise.

These four steps aren't just about making a company attractive to outside investors either, they also represent the same qualities that will help an organisation grow. Regardless of whether you are thinking of attracting outside investment or not, these processes can help your organisation reach a more robust position.

Earlypay has supported Australian SMEs with fast and flexible alternative funding solutions for more than 20 years. Our invoice finance and equipment finance products allow business owners to proactively manage their cash flow, freeing up your working capital for investing in growth. To chat about whether our solutions could be right for your business, call us on 1300 760 205.

If you'd like to learn how Earlypay's Invoice Finance & Equipment Finance can help you boost your working capital to fund growth or keep on top of day-to-day operations of your business, contact Earlypay's helpful team today on 1300 760 205, visit our sign-up form or contact [email protected].