What does an Investor Look for When Evaluating Businesses

Business Investors don’t like to take huge risks. If you’ve ever seen the show Shark Tank you’ll know that potential business investors want to know every detail, they want to see the data and they want to know they are investing in a solid business. This means, as a business owner you need to approach your business like an investor would and keep in mind the types of things an investor is looking out for when evaluating your business. 

To make your business appealing to an investor you need to make your business as attractive as possible. Minimizing risk, implementing systems, structures, processes and building a solid team are essential. To an investor an attractive business also means low risk. If there is key person or team member risk, or if your business has no contracts with the clients or has pending issues with employees/clients suing the business, that poses great risk.

To make your business appealing to an investor you need to make your business as attractive as possible.

Understand that investors also invest in great people, so when it comes to your leadership team or advisory board, investors looking to invest in your business are going to want to know “who are these people?” They are going to want to know what they bring to the table. What’s their experience? The more great people you have as part of your business, the more appealing it is to an investor. 

An investor is thinking of three things themselves. Firstly, the investor says to themselves “If I am going to put money in this, am I ever going to see it again?” the second thing is “if the money does go in, when am I going to get it back?” and finally they want to know “how hard is my money going to work for me?” which means “what rate of return am I going to get on that money?”

Building a business from the ground up with the goal of being able to walk away from it one day forces you to approach every aspect of your business with the question “is this something worth investing in?” It forces you to build solid systems and processes so that an Investor can come in and pick up where you left off. The less hassle and headaches waiting for them the more investor ready your business is.

This is why we created the tools we use for our own business and our Inner Circle members. It’s the execution of these tools that leads to the results. Knowing numbers, executing on the tools and having support from a Strategic Mentor leads to inevitable success.

If you are working on your business, then you’re still effectively in it because it’s still occupying all your time. If you don’t make a strategic change to think like an investor, then your business will still be occupying all your time in the future too. Perhaps long after you would have liked to have left.

To create your own freedom business requires a clearly defined strategy that includes consistent reporting on data, building up a strong culture with great people and implementing solid systems and processes so you have a business model in place. Approaching your business with the end goal of being able to walk away from it removes emotion and allows you the best possible path to total financial freedom.

If you would like to learn more about investing in business or building up your own Investor IQ or perhaps you would like some 1-1 support, feel free to reach out here and let’s see what we can do for you.

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