Excerpts from the panel discussion 'Key steps to make your company investment ready' as part of the Gulf Capital SME Insights Summit with industry thought leaders from Gulf Capital, DTEC, Dubai Media City, and The Benton Group.
12 ways to make your business more attractive to investors
Finding sources of capital is the biggest challenge facing any small business. To provide insights on how small and medium-sized enterprises (SMEs) can win investment, a panel of leading investors and business owners at The Gulf Capital SME Insights Summit on 9 September considered the factors that make SMEs attractive to investors. They provided advice on attracting private investors and partners, entering new markets, and on how to improve companies’ operational performance and sustainability:
1 - Be willing to share ideas –A reluctance to reveal core business details can be counterproductive to a new business. Sharing as much information as possible with potential investors will not only promote confidence in the proposal but will also give them the opportunity to contribute to the plans and provide another perspective.
2 - Focus on one core initiative – While ambition is always a good thing, it is important for small businesses to consolidate their resources and focus on the core business at the outset.
3 - Be patient – Pitching to investors should not be viewed as a sales exercise and it can take time to build trust. Time should also be spent on building relationships with clients and suppliers.
4 - Research the market – Entrepreneurs think long and hard about the potential benefits of their product or service, but there is often an expectation that customers will immediately buy into this vision. Extensive research needs to be done to ensure that the market is fully understood and its needs are being met by the initiative.
5 - Don’t underestimate competitors - Anything that can provide the same service as an SME is competition. But while it is important to evaluate your position in the market, an unhealthy obsession with the performance and activities of similar companies can lead to panic and undermine confidence in the business model.
6 - Learn from failure – There may have been companies in the same field as any given SME that have not been successful. These can provide valuable lessons for an entrepreneur.
7 - Maintain cashflow – In the current economic climate, it is important for SMEs to focus on cash preservation and management. Overcapitalising at this stage can be a mistake.
8 - Lead by example – A good company has good energy and investors say that while many problems within a business can be fixed, the culture of a company cannot. This dynamic cannot be instilled, it needs to come from the top. To demonstrate company culture, it is a good idea to invite investors to your place of business rather than going to them.
9 - Invest in your team – While efficiency and cost-cutting are important, it is not always a good idea to use the least expensive staff. A more experienced team could benefit a business in the long run. Employ people with a variety of strengths rather than people who fit a ‘type’.
10 - COVID rebound – An SME may have had to adapt during the pandemic or it might have been able to exploit the situation, but if the business has survived, it is strong. However, experts say that this is not a time for rapid expansion. SMEs should solidify their position and use the experience to research, plan, and visualise.
11 - ‘No’ is not forever – There are many reasons for an investor to reject an application, this is not necessarily a reflection of the business. Sometimes, the proposal does not fit with the financier’s current portfolio, but this situation can change. It is possible to ask again at a later date when the SME has gained momentum and can demonstrate viability.
12 - Seek support - The Covid-19 crisis has presented a lot of challenges and many companies have had to collaborate for mutual survival. At this time, people are often willing to spend time to provide advice and support. Help is available online in the form of webinars, workshops, and networking. Remote support can be provided by overseas consultants and specialists, and complimentary firms within the same industry should also be considered as business allies.
This panel discussion was held on Wednesday 9 September 2020, at 12:30 pm UAE Time as part of the Gulf Capital SME Insights Summit.