Running your own business can be an extremely rewarding but it is also a LOT of hard work – I should know – I have been there and got the T-shirt after founding The Healthy Mummy in 2010 and growing it to a $20m+ business and also founding Healthy Active Pet in 2022.
There is often a perceived glamour associated with running your own business but the truth is that it isn’t glamorous at all.
And anyone who runs or has run a business knows this all too well!
It can take over your life, create a lot of stress and often can bring little financial reward.
To successfully run and grow a business requires time, continuous effort and money.
The fact is that to run and grow a business needs constant investment. There are fixed monthly costs that will be a necessary part of running a business then there are the additional costs each month that are often spent on stock, product development, innovation and consultants to name but a few!
And this is why business owners taking investment is so common.
But before you jump into the decision of taking investment there are some things to consider
Do you need to take investment?
The number one question I ask business owners before they take investment is will money fix the underlying issues in your business that are resulting in you not make enough money – or is it a short term fix to ease the financial pain you are going through?
Money, per-se, isn’t usually the quick fix people think. If you take the money and don’t spend it wisely then you will be in a worse situation.
For example – if you take investment to spend big on marketing and let’s say you take $1m in funds to run a national TV and radio campaign in the hope of significantly growing your brand, customer base and revenue, but the TV and radio campaign is poorly executed then the $1m can literally be gone in a 2 -3 month timeframe with no increase in revenue. This has happened to a number of brands and it is without doubt a risk.
But after the money is gone you are left with an investor who now owns a share of your business and is probably cranky that the $1m they invested hasn’t worked to grow the business.
I always advise that before any business takes investment that they look at their pain points and the reason for wanting money. Is it because they can’t make enough profit and are struggling? Is it because they have debt they want to clear? Is it because they have a brilliant idea but need the funds to fund it?
If your reason is that your business is not making enough profit then money won’t solve this. I strongly believe that if you have a good customer base, have regular sales but are not making enough profit then the solution is to work with an advisor or consultant who can help you to fix the gap and look at where your business can become more commercial and essentially make more revenue and profit.
If you can do this you won’t need investment.
The other key consideration is other than money, what do you need? As having the right people in your business can be 100% game changing. The right people can transform your business and I believe it is the people in the business who can make the business.
If for example you take investment from a private equity firm who have no contacts or experience in your area of business then you need to ask what value they will add – but conversely if you take investment from someone who has real life experience and scar tissue of doing what your business is doing – think of the difference this person could make on your bottom line.
If you do decide to take investment there is also a lot of work that needs to be done before you start making contact. Anyone investing in your business will want to see detailed financial accounts and history as well as future 3-5 year P&L that shows in detail where the investment will go and what the business plan is moving forward. They want to see your vision and where you will spend the money.
Investors want to know you have really considered the future, what risks, opportunities and threats exist and how you will lead and grow the business. P.S investors always invest in the founder as well as the business so make sure the passion for your business shines through and that you still have the passion and drive to take your business to the next level if you take the investment.
So in summary – investment can be a good thing if you take the right investment and with the right people but also ask yourself if you do actually need investment or if you instead need help to make your business more profitable with a greater revenue.
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