1. Local Business Partners: Solving problems for businesses in Manchester and the North West
0161 871 4600 • info@localbp.co.uk • www.localbusinesspartners.co.uk
Make Your Business Plan
‘Pret a Manger’
Freshly made and containing enough to satisfy but
not overwhelm. Too many business plans try to
contain every last detail and writing them becomes a
chore with the result that an investor gets a
confusing, out of date plan that fails to inspire.
Question: Without looking at it, can you accurately
summarise your business plan in 30 seconds?
The Right Price
Valuing small businesses is very hard, one or two
variables can change the picture completely. Think in
thirds: the post investment value to owner,
management and investor.
Question: Who will feel the most motivated to drive
growth after the deal, you or the management?
Are You Really Unique?
Uniqueness equals value and that makes it easy to
over-estimate. Any investor will assess how quickly a
competitor can copy your USP? What’s stopping
them?
Question: When was the last time you asked 10
customers why they choose to work with you?
Ready for Inspection
Are you ready for due diligence? It’s not only your
paperwork that needs to be in order and confidence
inspiring, it’s how well prepared you are for searching
questions about the weaknesses in your business
and your motivations.
Question: You might know your business back to
front, but does your Number Two share your
motivations?
Is your Solicitor on Speed Dial?
Has your solicitor got experience of negotiating with
investors in a business of your size and the due
diligence process? A lot if business owners find they
have given away control and equity once their
shareholding has been diluted.
Question: The level of detail in a deal can surprise,
is your solicitor on a fixed fee?
Who’s On Your Bench?
Smaller businesses are all about the owner but a
long term investor might be more focussed on the
team who’ll be running the business next year. Do
they see things your way?
Question: What will your key managers say to an
investor about their ambitions for the company?
How Much is Enough?
If you set your investment level too low you face
doing this all over again, sapping investor confidence
and professional fees. Too high and ongoing costs
will weigh heavy. You must be guided by a single
long term aim to get the level right.
Question: Are you consistent in identifying your long
term goal or does it vary?
Top Secret
How copyable is your idea? You can’t patent ideas
and real investors are more interested in execution
than the idea itself but Non-disclosure Agreements
make things clear from the outset.
Question: Who knows about your ideas right now
and what controls apply to them?
Where’s the Exit?
No-one cares about your retirement plans so who
exactly would buy your business once the investment
has delivered the growth you want? It’s a short list:
trade sale, listing or MBO.
Question: Who would want you to remain in the
business after you’ve sold it?
Don’t Invest in a Criminal Act
Arranging investments is regulated by the FSA and
breaking their rules can mean breaking the law. You
MUST ensure that the investor is being introduced to
you properly and it must be clear in whose interests
they are acting.
Question: Has your solicitor got the requisite
knowledge to advise on FSA regulations?
For a deeper discussion of financial strategy
email our finance partner Oli Randell:
Oli@localbp.co.uk
Ten Ways to Secure Business Funding
These 10 tips will help make your business ready for investment or lending.