Pro Installer December 2016 - Issue 45 | Page 45

45 PRO INSTALLER DECEMBER 2016 PRO BUSINESS @proinstaller1 THE RISE OF CROWDFUNDING Raising finance for your business can be a stressful process and it’s not as easy as it once was. With banks lending to businesses less, it can be a struggle to reach the growth and potential you’re looking for. As the alternative finance market grows, business owners now have another avenue to try. Equity crowdfunding for businesses has exploded and has helped fund successful enterprises such as Brewdog and Mondo Bank. It can be a fairly long process and will require more time than a standard business loan, but here are some tips as to where to start. THE PLAN THE BUZZ Firstly, you need a clear plan. What are you going to achieve? How you are going to achieve it? Who is going to achieve it? All of these questions need to be addressed in a well-structured business plan. Fifty-page documents are not always the best route. Investors and equity crowdfunding platforms can be turned off by this and it becomes, well, just a bit boring. You need to be short, snappy and smart about what is included in your business plan. Think about what you are writing and some it up in the most efficient, yet informative way. You should be including your vision and mission, details of the product and service you are offering and why this differs from what is already available in the market. Next, the management team. This is very important. How is the team qualified to guide the business and what past experiences do its members have that will drive the business forward? Explore cash flow forecasts, what you are expecting from the business and how much it will make once you have received investment - be realistic here. How are you going to market the product? Competitor analysis is important. Don’t be afraid to be innovative with your plan, try and stand out and give it some sort of edge. After all, you are trying to attract investors to invest in YOU - so what separates you from the rest? You’re excited about your business right? You trust that it’s a great idea and you believe in it, now it’s time to make everyone else feel the same. Potential investors need to be as excited as you. A good place to start is a short video to highlight your strengths as a business. Make it fun, short and sweet. Also, get yourself online and on social media. Showcase your work across Twitter, Facebook and Instagram and engage with your customers and potential users. It’s a great (and FREE) marketing tool to get your business known and visible, and with the option for a paid ad service you can increase your marketing even more. Create a build leading up to your funding round. Create some noise around it and why it’s so exciting and exclusive. PLATFORM EQUITY OFFERED AND VALUATION This can be a tough one to figure out and will require a lot of thought. You have to consider how much of your business you are willing to give away. As well as that, if you are planning on multiple funding rounds, you need to save some equity for the future. Firstly, you will need to get your valuation straight. If you are going to offer 25% of your business for £250,000 then you have valued your business at £1m. Is that a reasonable and justified sum? You cannot simply pick a value you wish to raise and only offer a small percentage of equity. It needs to add up and valuing your business will play a huge part in what you can look to raise. Remember, your figures have to be justified. When valuing your business you need to consider the value of the assets, the cash in the business, discounted cash flow for future projections, the valuations within the industry, the current profit and loss, the revenue and the projected sales as well as the value in your existing staff. Again, you need to be realistic. Valuing yourself too high will make investors less likely to invest as they will be expecting a higher share for their cash. Be reasonable but also be comfortable with the amount of equity you are giving away. The equity crowdfunding market has grown at such a huge rate and there are now a number of great platforms to choose from. When it comes to picking a platform to raise with, look at what suits you the best. By this I mean look at the charges, what percentage the platform will charge from your raise and do they also take a share in your business. Do your research, consider the types of businesses they have previously funded and what type of investors they are likely to have. Try and find a platform that suits your needs and also is likely to be the most relevant for your business.