How To Get Funding – Making Your Business More Attractive

How To Get Funding

There comes a time in the life of every business when discussions begin about adding debt or capital to the company. How do you make sure your business is attractive to financial institutions and investors?

There are many different strategies and methods for getting your business ready for raising capital. There are 6 value drivers that comprise the total value of a company.

Here, we’re going to focus on the financial aspects of preparing your company to raise money either through debt or equity investment.

Entity Structure

In 2017, the tax rules changed for corporate entities. Depending on what type of business you have, check with your tax advisor to ensure that your company is structured to take advantage of the new laws.

If your company has a complicated structure, now may be the time to simplify that structure. Investors prefer companies that are easy to assess – no corporate mazes with multiple companies, multiple tax year-ends, and multiple structures.

Simplify and set up your organization to reap the benefits of the new tax laws.

Need to know more? Check out this presentation: Tax Reform Event Presentation

Accounting and Finance Records

Accounting and financial records are critical to “selling” your company to investors. In most companies, there are many areas to focus on including:

  • Clean up any personal expenses found in the P & L. No investor likes to see this. What else is being hidden?
  • Work with your accountant to ensure you have the correct accounting structure including accrual accounting vs. cash or tax accounting. If not, get it updated before you start pitching to investors.
  • What is your reporting process and structure? Get with your professionals to determine what this structure should be and implement. Investors want to know that reporting is accurate, thorough and timely. If this has been a challenge in your organization, it’s time to fix it.
  • Have your financials been reviewed and certified by a professional? If not, start this year.

Forward Metrics

When evaluating a company for financing, professionals review the budgets and their accuracy. Does your organization have a budget and does it guide the company?

How are your company’s revenue growth and projected cash flow streams? A top accounting or valuation professional can help find and suggest fixes for the problems here. Investors want to work with a company that has a strong understanding of its financial drivers and know how to scale appropriately.

Preparing a company for raising financing and capital can be a challenging process. Understanding the correct corporate structure, the accounting and finance structure, and the future projections for your company are critical for the investor “fit.”

Need to know more? Join us for a Business Owners Workshop on February 7th that is designed to help you prepare your company to raise money.

Want to know more about the value of your company? Rest assured 35 years of experience is behind Management Insights™, Forward Insights™, and Expert Insights™ – the tools you can use to increase the value of your company.

Quist Valuation

Quist Valuation was founded in 1984 and is a leading independent business valuation and securities analysis firm.

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