It’s one thing to start a business, get your idea off the ground and start establishing yourself within your chosen field, but taking it to the next level is a different matter entirely. Finding the right balance between maximising profits and encouraging continuous growth is hard, and not one that a lot of businesses can do alone, which is why investment is such a popular route and lucrative industry of its own.
Making sure you time your search for investment right is one of the trickier aspects, as you don’t want to rush funding before you’re ready and leave investors underwhelmed, and you wouldn’t want to leave it too late either and give off the appearance of a stagnating business. With both positives and negatives to seeking outside investment, each individual company needs to be aware whether it’s the ideal way in which for them to proceed.
Why Seek Investment?
If your business lacks the capital required to undertake the kind of growth you’re aiming to achieve, then outside investment is the most straightforward way of injecting fresh money in to your company. Less of a risk than attempting to secure a bank loan or taking any money out against your business or its assets, the thought behind encouraging investment is that promoting natural growth will ensure that – even with further outgoings – the additional work and activity achieved by expansion will boost your profits.
With some companies well versed in partnering with young start-ups and new businesses, helping them to achieve their long-term goals through not only financial backing but advice and some mentoring, there is an element of adopting additional expertise that shouldn’t be discounted, either. A firm like Downing LLP, for example, have a proven track record of successful investments, helping usher a variety of businesses along in their quest to achieve sustainable and meaningful growth – their recent deal with Pivot Power and Arsenal Football Club a perfect illustration of that.
What’s The Catch?
Investors aren’t in the business of handing out free money, unfortunately, so they will be looking for a stake in your company and a return on their investment, too. An additional stakeholder, they will be giving their opinion on operational concerns where applicable, and they will be taking a share of any dividends, too.
What each business needs to decide before seeking investment is if they’re willing to essentially sell a piece of their company to somebody external, and if so, how much of it in percentage terms would they be comfortable with losing. Usually, the higher the investment sought the higher the percentage sold, but that entirely depends on the business and what type of deal can be reached.
Sources: telegraph.co.uk / downing.co.uk