When Is It Time To Bring In An Investor?

07 Apr 2015 in Finance

When you’ve put a lot of time, money, and sweat equity into your business, the last thing you want to do is allow an investor to swoop in and capitalize on all of your hard work. It can seem really unappealing to let someone take a stake of the profits by just buying their way in, but sometimes you need to have some working capital to take your business to the next level. For the purposes of this article, we will use a nightclub as an example for our business that is struggling. You may not have the same type of business, but the same train of thought should apply to any type of industry.

Create a Plan and Projections

The first thing you need to do when deciding whether or not to shop around for an investor for your nightclub is to create a new business plan complete with projections. Not only will you find it difficult to get a serious investor to consider an opportunity without paperwork to back it up, but you won’t know if it is worth losing a percentage of your business to get some extra capital to grow unless you can accurately project your sales increases. Consider bringing in a business consultant to help you get your projections on paper so you can know if an investor is worth it to you and that you have everything that a potential partner would ever want to see.

Have a Number in Mind

Once you have accurate projections, you can have a number in mind along with the percentage of the nightclub that it would buy them. This is really important because you need to know how much money it will take to make your new business plan come to fruition and how much money their share will be worth to them. By knowing those two facts, you can better position yourself as a high quality investment opportunity.

Factor-In New Services

When you’re planning out your new business plan for the nightclub, it can be very easy to overlook certain elements such as new items and services. One of the most drastic things that will likely be on the docket is a redesign of your nightclub’s interior, so forgetting about services and products that will entice new sales can be overlooked or forgotten. Staying on top of the latest trends like bottle service and keeping the necessary accessories like sparklers for bottles on hand can cause your new plan to fall apart before it ever gets off the ground.

Consider Advertising and Marketing Costs

Another overlooked expense that needs to be factored-in to your new business plan is advertising and marketing costs. You can create the hippest nightclub ever, but if nobody knows that it exisits it won’t do you a bit of good. Your plan to advertise your new nightclub should be just as important as the redesign itself; perhaps even more important.

Though bringing on an investor to help you take your nightclub to the next level may seem like a risky move, sometimes it is the only way to get your business to the level you want it to be at. Just take your time, crunch the numbers, and don’t be afraid to bring in a business to consultant to help so that you can be as informed as possible when deciding whether an investor is the right solution for your nightclub or other type of business.