Getting funding for scale-ups is not easy. You’ve put a lot of work into making your company an attractive proposition for investors and securing the finance you need. While you have achieved your initial end goal, it’s really just the beginning.
You now need to maximize your return on the funding you’ve received. This is obviously in the interest of your company – to facilitate growth – but also the investor, as they will want their money spent wisely by seeing a profitable return.
Future investments in your company will depend on how well you use your first funding.
It’s paramount to maximize your return on your business funding and this article details 5 critical ways to do this.
1. Business planning
At Boardroom Advisors, we believe that to secure funding, you begin with your created business plan to show the potential of your company. After getting the funding, it’s time to assess the plan and either put it into action or evaluate and improve it.
If you haven’t created a business plan then it is crucial that you do so now. Your business plan ensures that your company is well-placed to progress because it requires you to put in the hard work of research; and from this, you can make educated and focused decisions.
Your business plan will need:
- An executive summary
- A description of what your company does
- A comprehensive market analysis
- An outline of your management and business structure
- A list of products and/or services you offer
- A strategic sales and strategy plan
- A clear amount of funding (which you will already have)
- An insight-driven financial projection
- Leadership team profiles
By discussing and writing down all of these sections with respect to the context of your company and not as a general plan, you should be able to make informed and profitable decisions as a business which, of course, directly impact the way you use the funding you just received.
2. Performance Monitoring
Evaluation is key to any successful company as explained by business consultant experts from Innovation Vista. It is essential when you have received funding because then, someone else has money invested and they will want your company to work as efficiently and profitably as possible.
Whether your business is just starting out or has been running for years, there needs to be a consistent performance monitoring process.
This is because your company will hit obstacles and may falter at some points. Encountering these obstacles in itself is not a huge problem, the problem comes from not evaluating where your company is struggling and then creating solutions.
Regularly using SWOT analysis is a great way to monitor your performance as a company. Through this tool, you brainstorm as a company about what your strengths and weaknesses are, as well as what opportunities and threats there are for your business.
This is a very useful way to assess not only where your company’s performance could improve, but also what is working well within your business already.
3. Cash Flow Forecasting
Cash Flow Forecasting is very important to do when you receive investment. It will lay out how much money you’re expecting to bring in and how much money you’re expecting will go out – in sales and costs.
This is useful because it will map out the months ahead, which you won’t necessarily always stick to, but you would still be able to make informed decisions based on your forecast. It also will give you a reference point to see if your company is progressing in the way you wanted and planned.
Cash Flow Forecasting is effective also because it helps you keep eyes on the money your company has. A mistake that can happen when funding comes in, especially large amounts, is that it’s possible to get over-enthusiastic about your wishlist. Comparing forecasting and actual spending on an ongoing basis helps maintain control and ensure you don’t lose sleep worrying.
4. Growth Strategy
You, as a business, and your investors want the funding you have received to facilitate growth. To ensure this happens you need to have a growth strategy.
An effective way to facilitate a growth strategy is by using the MOST analysis tool. This tool is similar to SWOT in the sense that you would be evaluating your company, but this time, MOST aids the creation of your actionable strategic plan.
It breaks down your growth into:
- Mission – Where do you want the company to be in terms of turnover and profit within a certain timescale? The timescale is important as it gives you a measurable target that can be evaluated.
- Objectives – What are the general steps your business needs to go through to achieve your mission? Don’t worry about the ‘hows’ yet.
- Strategy – This is the beginning of the ‘hows’. In what ways may you achieve your objectives? Write down at least two for each objective as it gives you options.
- Tactics – This is the practical ‘doing’. Organize and write down who will do what and when to put your strategies into action.
This creates a working document where you can tick off tasks and it should be reviewed every 3-6 months so you keep driving towards your objectives.
5. Taking advice at the right times
Being receptive to advice is one of the most useful skills an entrepreneur can have. This is more important than ever when you receive funding because you’re no longer just spending the company’s money.
Being able to listen and take on advice will allow you to make the right decisions at the right time and maximize your return on your funding.
From doing your SWOT you will have an idea of your company’s weaknesses. A potential solution to these may be to seek help and advice in these areas. Requesting help with your weaknesses is a big company strength.
For instance, if creating a reactive and focused business growth strategy proves to be more difficult than anticipated, you have the option to seek advice from an experienced operations director who’s equipped with the exact knowledge and expertise that can help plan for your company’s growth.
To sum up
By enacting these steps, you will give your business the best chance of maximizing the return on the funding you have received. You can find templates for SWOT and MOST tools here with the FREE business strategy toolkit that you can use today.