Expanding your Business

How to Reach the Right Investors

As an entrepreneur, you may have the investment teaser deck, and know the profile of investors you are looking for but you may still struggle to source the investor. Sourcing investors is one of the most critical parts of securing funding from an investor.  In this article, I will share with your some tips on where to source the right investors that will provide you with the resources to grow a sustainable and scalable business: Join incubator and accelerator programs as this gives you and your venture visibility Join Angel networks and communities Be a part of support organizations’ communities Join associations that relate to your industry Reach out to Universities with strong business or entrepreneurial programs Reach out to your current network and see which connections they have  Use Linkedin to search for investors and view their profiles Network with other investors that might not be right for you, as they can connect you to others Research your competitors and identify who their investors are  Create a profile on online crowdfunding or investment profiles Attend events and conferences related to your sector of focus Host events Identify where the ecosystem congregates and be there Put yourself and your skills out there by being a mentor to other new entrepreneurs With this, you can create an investor target list where you highlight their contact details, past investments, connections you have in common if applicable, where they are based, where you found them, why they are a good fit for you, and any other relevant information. Remember that the role of your investor is to provide the expertise, network, and investment to help make your business sustainable and scalable. Contact Versa Research your trusted data, research & consulting partner!   Read Also:  How to Select the Right Investors

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How to Leverage Story Telling for Your Business Pitch

There are a number of reasons a business needs investments, these investments could be in the pre-seed, Series A or B and regardless of whatever stage the business is operating, the major reason for seeking investor’s funding is usually for expansion purposes. This expansion could be in the line of products or the need to serve more customers in their growing numbers due to exponential demands. Why Storytelling? Story telling has been found to be the underlying magic when pitching to investors. Effective story telling has to be genuine and linked to the WHY of the business i.e. the challenge the founder(s) were trying to mitigate when they set up. It also has to be told with clarity backed up with research-based statistics on prospective customers that are in need of such solutions. Highlighted below are the key elements of a Pitch Deck The Pitch Structure The pitch deck structure while different in the pieces put together as templates by different businesses, should still have the most essential ingredients and answer the potential investor’s questions. These items in a pitch deck should be on each slide Cover Page The cover page is a basic design that captures what the organization does. Usually the logo of the organization and the tag line, which serve as their value proposition to clients. The cover page should be very simple in design and text. Introduction The introduction is the executive summary of the pitch deck. All the parts in a pitch deck should follow a simple rule “less is more”. The Pitch deck should have very limited words and should be clear. Problem State the problem in a very clear and concise manner. This slide should capture in bullet points the problem your business is trying to solve. Solution The solution slides need to state the function of your product or service as it addresses the problem you have stated. Try not to get into mentioning features as what is important here is how your product will benefit customers. Product Demo If you are making a physical presentation, your product demo should be in a video of 30 seconds or less about how your product or service functions to provide the solution. If you do not have a video, then a pictorial view of images can also be used to represent this. Market Size You can adopt two approaches. You either take the top-down or bottom-up approach. The top-down approach is to find out the size of the market and estimate how much of that size you think you can capture. I think the top-down helps to be more realistic as what you hope to capture can either be expressed in years or in the lifetime of the business. Business Model What would your business model be? Are your products going to sell for a particular price? Would your customers have to subscribe to it weekly, monthly, or daily? This is what your business model represents. Some social media platform runs on a freemium model where users do not pay to use such platforms; however, the platform then makes money from advertisers wanting to gain visibility from this number of users for their products or services. Competition List your competitors whether they are direct or indirect and mention how you are better than them. For example, the indirect competitor for a carbonated drink is water and most bottling companies have succeeded in making their products a unique alternative to water by serving a refreshing taste. Mention here what makes you stand out. Go-to-Market When you launch a new product, it is necessary that a market plan exists; it helps to answer the question of how you would acquire customers. What steps are you going to take for customers to engage you? Would you have a direct market, use radio or television, social media, sponsored adverts, print, etc. to reach out to your targets. Team Your team information should display competence. Most start-ups have a product developer and a marketing officer. This can be seen in the likes of companies like Apple where Steve Jobs is the Chief Marketing Officer with communication prowess and ability to get customers to buy while Steve Wozniack was the developer. 2-3 team members can be the founder or co-founder and launch the start-up and add other team members as the organization grows. Milestones Investors only want to make a contribution because they look forward to returns on their investment (ROI), no investor is your friend. This is the section where you show your traction in the form of partnerships, number of downloads, and most importantly that you generate consistent cash flow and serve a good number of customers Fundraising Information How much funding would you need and in what ways are you going to apply the funding you get. What this funding injection would generate within a specific timeframe. These are questions you want to answer in this slide. Funding is usually needed for operational costs such as rent, staff salaries, office equipment, licenses or certifications, and many more depending on your business needs at that moment. While receiving funding for your business is a great move, it can also lead to the death of start-ups as initial exposure to huge funding without experience or the ability to manage such funding could lead to instant gratification. This is why some start-ups have raised funding but are not profitable. I suggest that a business proves through its financial statement to be profitable enough before seeking funding in order to grow a sustainable business model.   Emmanuel Otori has over 9 years of experience working with 100 start-ups and SMEs across Nigeria. He has worked on the Growth and Employment (GEM) Project of the World Bank, Consulted for businesses at the Abuja Enterprise Agency, Novustack, Splitspot, and NITDA. He is the Chief Executive Officer at Abuja Data School.

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How to Select the Right Investors

At this stage,  you have created your investment teaser deck, but now you are trying to identify which investors to reach out to. The first thing to remember is that the role of your investor is to provide the expertise, network, and investment to help make your business sustainable and scalable. As an entrepreneur, it is very important to know what profile you are looking for in an investor and how to attract the best kind of investors. It is okay to be picky, in fact, it is essential that you are picky and do not accept funding from just any investor who provides it.  In this article, I will share with you some tips on how to ensure you are selecting the right investor that will provide you with the resources to grow a sustainable and scalable business: Your investor should be someone you enjoy working with – not necessarily your friend, but someone you have a cordial working relationship with Your investor should be knowledgeable about your industry  Your investor should have some knowledge in entrepreneurship and/or funds raising Your investor should have a track record that is evident in their portfolio Your investor should have a track record for investing in businesses such as yours, industry, or the stage of your business Your investor should have a strong network  Your investor should be clear on why they want to invest in your business Your investor should do thorough due diligence on you and your business Your investor should bring diversity to your investment group Your investor should bring an appeal that will draw other investors to your business An extra bonus is finding an investor that has a reputation for providing multiple rounds of investments. Selecting the right investor for your business can make or break your business. Do not feel pressured, do not feel rushed. Take your time, keep the conversations going until you are confident you have found the right investor. Contact Versa Research your trusted data, research & consulting partner! References https://carta.com/blog/how-to-choose-investors-for-your-startup/ https://www.forbes.com/sites/alejandrocremades/2018/09/30/how-to-find-the-right-investor-for-your-startup/?sh=4ca39e327b82

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Key Factors that Hinder SME Growth

According to a report published by the World Bank, it was observed that while Small and Medium Enterprises (SMEs) create 7 out of 10 jobs in emerging markets, access to finance has remained a key constraint to SME growth. The Report noted that access to finance is one of the most cited obstacles facing SMEs to grow their businesses in emerging markets and developing countries. While access to funding is a challenge for most SMEs across the world and especially in Nigeria, the ability to create jobs to support the ongoing efforts of the Federal Government of Nigeria has become a significant priority as several financial interventions such as the Anchors Borrowers Programme, TraderMoni, Survival fund, AGSMEIS initiative, the creative industry fund, etc. seeks to drive economic development by directly impacting SMEs in order to create jobs. A question of whether the interventions provided has been properly utilized has also been a major concern to the Central Bank of Nigeria as there has been a high level of defaulting in the ability of these SMEs to make repayment for the loans as well as a discovery of misappropriation of funds. The challenges SMEs face are hinged on different factors and access to finance is one of them, however, without fixing some other challenges that are cardinal to the success of a business, access to funding would make no difference in the operations of such businesses. Some of the key factors that hinder the growth of SMEs aside from access to finance are: 1. Lack of Good Financial Records One of the reasons for the failure of SMEs is the lack of proper financial records. Inability to understand whether a business is making a profit or running at a loss is an assumption that owners of SMEs indulge in, thinking that as long as there is cash flow, the business can survive. While cash flow ensures that a business keeps running, survival does not in any way equate to growth as growth comes from profitability.  In order to expand, offer additional products or services, or hire extra hands you need your business to be profitable. Keeping financial records does not have to be rigorous. It simply has to be what forms the cost of running the business (expenditure) and what are the sources of revenue (income). Income has to be higher than expenditure in order to be profitable in business while still serving the client with quality value. There are several tools in place to ease bookkeeping e.g. Quickbooks and Sage 50. These tools can help managers without accounting background track their finances. 2. Lack of Standard Operating Procedures (SOP) Due to the lack of jobs for the teeming population, entrepreneurship becomes the best chance for most recent graduates and those in the informal sector, therefore leading to the emergence of accidental entrepreneurs. These sets of entrepreneurs lack the basic skills to compete globally with their counterparts as there are many gaps such as lack of adequate training to establish and manage a business. They do not also have a Standard Operating Procedure for their businesses. Standard Operating Procedures are a set of instructions that help to create structure on how a business is operated by the team, this helps to create cohesion and organization in the day-to-day activities of the business. SMEs usually run on impulse either due to ignorance or inability to hire an expert to create an SOP, leading to haphazardly running the organization in a fire-brigade approach, making deadlines almost impossible to reach and satisfying customers becomes a mirage. 3. Inability to Leverage Social Capital Social capital refers to the ability to leverage key relationships with different stakeholders that are key to a business. This form of capital can either be a relationship with the supplier of raw materials required for production, to support the receipt of input at a reasonable price or provision of the materials on credit. Relationships with family, friends, associates, and belonging to circles of social clubs can be the beginning of securing customers whose patronage would help secure capital for takeoff. 4. Inability To Create Visibility Online Creating social media handles on Facebook, Twitter, Instagram, LinkedIn, and other channels as well as having a website are necessary for a business to become visible to its target market. SMEs are limited in customer acquisition as their dependence is only on customers that can access their physical location. Being able to gain visibility to markets outside your environment of operation will give your business a competitive edge and also ensure you gain immense visibility online, therefore, increasing your overall efforts in acquiring customers and continuous cash flow. When these factors are properly tailored to support the growth of a business, having access to capital might not necessarily be a major challenge as reported by SMEs as a buffer of opportunity to benefit from the market has already been created as a result of putting the following constants in place.

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Creating a Sustainable Competitive Advantage

To win in the marketplace on a sustainable basis, you have to choose a game plan (from among the many options) by matching the external opportunities with your distinctive internal competencies. One must, however, not take ‘’exploiting distinctive competencies’’ as an end in itself – it is only a means to an end. ‘’The real essence of business is to find and keep customers.’’ Wal-Mart’s Sources of Competitive Advantage A behemoth like Wal-Mart derives its competitive advantage from various sources. First, its low cost and efficient operations. It does a lot of little things extremely well and they all add up to a tremendous cost advantage. Second, its market position. Its small-town rural strategy has evolved into a network of stores with a relatively large number of ‘’local monopolies.’’ Third, its culture and human resources management. It’s empowered and committed associated ‘’live to work for the glory of Wal-Mart.’’ Fourth, its founder – Sam Walton – is Wal-Mart’s biggest enthusiast and cheerleader. He provided value by having a vision, setting the strategy, and creating the culture that drove the entire strategy. Questions for Your Business: How are you obtaining your returns? Lowest costs through scale advantages? Lowest costs through scope and replication advantages? Premium prices due to unmatchable service? Premium prices due to proprietary product features? Do you own intellectual property – patents, trade secrets, trademarks – which competitors cannot likely replicate? Can you deploy superior processes, capabilities, or resources that competitors cannot likely duplicate? In the final analysis, it’s not enough to identify an advantage over your competitors. The advantage needs to be sustainable and dynamic, for you to have a consistent edge in the marketplace.

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Leveraging the Success of a Franchise Brand

Building a business has never been easy and often requires years of dedication and hard work. For a successful business owner, being a boss can be exciting but stressful at the same time. It’s a time filled with the freedom to make your own choices; create the life you want. However, it can also be scary to make the leap from employee to employer. But the big question is, do you want to start your dream business from scratch, or leverage the success of a franchise brand? Now, you might be wondering; what is a Franchise Business? A franchise is a business opportunity that allows the franchisee to start a business by legally using someone else’s (the franchisor’s) expertise, ideas, and processes, in return for a combination of a flat fee, plus fees based on profits or sales. According to research, there are over 41.5 million enterprises in Nigeria. An estimated 80% of these new businesses, however, fail within the first five years, due to common and familiar challenges. However, it is proven that only 15% of franchised businesses fail, compared to the 80% failure rate among other independent businesses. Further, several countries, both developed and emerging, have embraced the franchise concept as a method of creating job opportunities. According to the International Franchise Association (IFA) report, franchises create an economic output of $1.6 trillion and account for 5.8% of the U.S. GDP.  Elsewhere, in a comparable economy like South Africa, franchises generate over 12% of the country’s GDP. Amazing!  isn’t it? Interestingly, unlike starting your own business from scratch, buying into a successful franchise business comes with exciting benefits which include the following: Training and Support: Unlike independent businesses, franchise business owners enjoy the freedom of being their own bosses while leveraging the support and training provided by the franchisor. The franchisor provides you and your team with initial training programs which cover areas such as product knowledge, operating procedures, merchandising, advertising, etc., as well as ongoing supports to ensure you succeed. Little wonder Tom Scarda, founder of The Franchise Academy had said “A franchise is a business with training wheels”. Brand Recognition. Franchising helps lend a competitive edge to your business as opposed to start-ups. Leveraging the success and recognition of a franchise business significantly reduces the stress of building your customer fan base from zero, which in turn, increases your chances of success. As a new business, one of the biggest struggles is finding customers. However, investing in a successful franchise brand solves that problem. You are starting on a well-established model Unlike starting from scratch and experimenting with different strategies and methods, Franchising provides you with already tested and trusted operational methods and procedures. Hence, you wouldn’t have to re-invent the wheel. Access to market research One of the franchisor’s main responsibilities is to develop marketing research and standards for promoting the franchise brand; improving the products and services and ensuring that the franchise business remains relevant, sustainable, competitive, and profitable. Business Relationship As a franchisee, you are a business partner and an ambassador of the franchise brand. Hence, you enjoy and have access to network with other franchisees in the franchise business, amongst others. Reduced cost of marketing By leveraging an already successful franchise business, you would not need to spend so much on marketing and advertisement as compared to an independent business owner. High Purchasing power Having operated the business for a long time, the franchisor has a list of approved vendors who are trusted with product and service quality. Hence, the franchisees not only have access to quality products and services but also affordability. Are you excited? Take the next step, call your franchise plug; call FBDS Nigeria today.

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