PPB July 2018

Raising Business Capital | FEATURE Gearing Up For Growth Ready to take the plunge and pursue capital? Consider these tips, from global fast-growth technology company Ansarada, before you go for the green. 1. Develop a detailed narrative. Your business narrative should include a realistic, detailed strategy that incorporates the current and future plans for your company. It should also articulate a thorough understanding of the industry in which you operate. Narratives can include identified direct and indirect competitors, how your company differs from them, and any other unique competitive advantages. Narratives should also demonstrate a thorough understanding of your target market, as well as growth potential and demand for your products and/or services. 2. Nail down the numbers. Be ready with historic, current and projected numbers, which need to be audited prior to disclosing them to any potential investor. Be prepared to show how funds will be used and how they may influence key figures. 3. Anticipate investor questions. Potential backers will want to know who the major players are in your organization, as well as any role played by government or regulation in your business. They will want to know your strategy, your markets, when and how you plan and produce strategic plans, how your marketing and operation plans work, and how much your investment plans and business case might cost. 4. Refine your risk management strategy. Identify the risks in your business and develop a plan that deals with each risk, including how to mitigate investor risk. Source: “Capital Raising: A Practical Guide,” from Ansarada Pty Ltd. are asset-based and cash-flow loans. With asset-based loans, banks take a look at a company’s assets, such as their inventory and receivables, and provide a loan based on a percentage of those. With a cash flow loan, banks lend a multiple of the stated cash flow.” Koosed points out that self-financing growth is yet another alternative. “There are also some individuals with sufficient net worth to self-finance their business, but the issue here is risk—you’re gambling big with your nest egg on an outcome that isn’t certain,” he says. What may come as a surprise to companies that are new to raising capital is that money isn’t the sole factor in a successful growth strategy. “We look at three things in descending order of importance,” says Koosed. “Culture, competency, and cash flow. “First and foremost, there has to be a cultural fit. You’re bringing two disparate things together and making them one. If the culture isn’t the right fit, you’re taking two things that worked and making one bigger thing that doesn’t,” he says. “Competency is another huge one. You want to be sure that you have complimentary skill sets and competencies so that the whole is greater than the sum of the parts. Finally, cash flow. We want to acquire good companies and give the support to become even better. The opportunity cost involved in trying to take a company that isn’t working well and trying to fix it just takes too much time, energy and focus away from growing the core business.” Nicholson adds, “Make sure you have a clear and well-developed business plan to support the reasons and uses for the capital. It is also important to evaluate the risks and demands associated with an expansion or acquisition plan—what will the impact be on the existing management team, will it be a distraction to the core business, are other investments going to be required?” Once you feel you’re ready for an infusion of cash, it’s crucial to be sure you’re in a | JULY 2018 | 57