At some point in every growing business’s journey, it needs to tell its story to potential investors. This story doesn’t just cover where the business came from, but where it’s heading and how well-equipped it is to get there. A great story acknowledges the challenges faced and the lessons learned. Investors appreciate this honesty—but once the story is told, the hard work of due diligence begins.
So, What Are Investors Looking For?
Investors have a few key things in mind when evaluating a business. In short, they want to see:
- A Sustainable, Scalable Business Model: One that generates reliable cash flow and has the potential to grow without burning through more resources than necessary.
- Good Governance and Risk Management: A business that is well-managed, meets its compliance obligations, and understands how to manage both day-to-day and long-term risks.
- A Track Record of Success with Room to Grow: Past performance is important, but investors also want to see opportunities for future growth.
A Sustainable Business Model
Sustainability means more than just staying afloat—it means having multiple revenue streams and a diverse customer base. This reduces the risk of being overly reliant on any one area. Investors will look for strong customer retention and low acquisition costs, which demonstrate that the business knows how to grow without over-spending.
Having a unique selling proposition (USP), or substantive differentiators is also critical. This shows the business has something that sets it apart from the competition, which is essential for long-term viability.
Scalability: Growing Without Proportionally Increasing Costs
A business that can scale is one that can grow its revenue without a corresponding increase in costs. This is where economies of scale come into play. Whether it’s through AI and automation, flexible team resourcing, established distribution channels, increasing share of client wallet, or a scalable platform like SaaS, investors want to see that the business can expand without sacrificing profitability. Investors also look for cost efficiency. Does the business have a healthy balance between fixed and variable costs? This signals that as it grows, it can maintain profitability.
Predictable Cash Flow Is Key
Cash flow is king, especially for investors. They want to know that the business can generate consistent, predictable cash flow. This means having diverse product offerings and multiple revenue streams to protect against market fluctuations. Good supplier relationships and contractual terms, inventory management, and credit control all help stabilise cash flow and protect the business from external risks.
Good Governance and Effective Risk Management
Good governance is all about having the right people in the right roles. Investors will assess the leadership team’s experience and their ability to manage the business effectively. It’s not just about operations—investors want to know that the team is monitoring risks such as market competition, regulation, and political changes. Businesses that stay on top of their compliance obligations whether it’s tax, legal reporting, ESG, or regulatory requirements—will always present better to potential investors. This shows the business takes its responsibilities seriously and is well-managed.
A Track Record with Growth Potential
Investors will always look at past performance. They’ll be interested in consistent revenue growth, profitability, and positive cash flows over several years. A strong balance sheet with manageable debt and good working capital is another sign of financial health. But it’s not just about the past—investors are equally focused on future growth.They’ll be asking questions like: Does the business have plans for expansion into new markets or products? How does it compare to the competition? Are there barriers to entry that protect the business’s market share? Does the business have the right leadership team and succession planning in place?
Financial Forecasting and Planning
A solid financial forecast is essential for investors. They’ll want to see detailed, realistic projections that account for different scenarios. Investors will focus heavily on the cash flow forecast, as this is what drives a business’s valuation.
Final Thoughts
As a business owner, telling your story to investors is important—but it’s just the start. The real test comes when investors look under the hood, examining how your business operates day-to-day. From building a scalable model to maintaining good governance and preparing for future growth, it’s all part of showing investors that your business is a smart investment. At Excelerator Partners, we’ve worked with businesses to build those strong foundations—helping them tell a story that doesn’t just resonate with investors but stands up to scrutiny.
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