Maximising Your Business/ Bringing in Investors
In Show 047- Maximising Your Business, Bringing in Investors originally broadcast on Facebook Live on Wednesday 3 January 2017 we explore this interesting topic.
Today we kick off the new year with Phase 6: Maximizing your business and bringing in new investors. This phase comes at the end of the consolidation part of your business lifecycle. You’ve brought on employees and you’ve protected your IP. Now you need to figure out how to maximize the business before you begin scaling up. Before you scale up you need to make sure you’ve solved all the problems you’re encountering in the day to day operation of the business.
Maximizing your business means figuring out what kind of business you’re in. Then detailing the operation of that business. Finally, you have to maximize the output from your employees – if you have any. There are many examples of businesses that expanded too fast. We had a client that expanded by purchasing other similar businesses. He acquired those businesses too quickly and ended up with a lot of employees that were not on the same page. The business ended up folding. That’s an extreme example but it happens all to often. Before you start thinking of expansion you have to maximize what you have.
How are you going to maximize your business? All business owners want to maximize their revenue. That’s a singular focus that doesn’t help you to achieve you long term goals. 80% of your work will come from your top 20% of your clients. You have to figure out who those clients are. It’s called the 80/20 rule. Focusing on the right clients to get the right revenue is a huge part of maximizing your business.
There are many different kinds of investors you can bring into your business. Venture capitalists are one avenue. They essentially use other people’s money to invest in attractive companies. They like to see your revenues and profits and they like to see that you have a long-term vision. Angle investors are similar but they usually invest early in the company and are willing to take a chance on a new company in exchange for a larger stake. Another type of investment is crowd-sourcing. This is relatively new and leverages the power of the internet to get many small investors. Australia has not yet allowed this form if investment but its only a matter of time before those laws change. Family and friends are another major source of investment in companies. Agreements must be in place in these situations to make sure you’re protected if disagreements arise.
There are many ways you can use investment to build your business. It can provide the tools and experience of the investor that can assist with major decisions. Having someone to bounce ideas off of can be invaluable. Getting a cash injection is really important but it’s not the only reason for bringing on an investor. There can be some disadvantages of course. Losing equity in the business can also mean you’re losing some control. The investor is now going to have a say in how your firm operates.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.