Businesses cannot succeed with finance from investors alone. Whether it be a private investor, relative, friend, acquaintance or even the bank, the investor needs to know that there will be some return and that your business will make it worth their while. In order to do so, especially in larger cases of acquiring venture capital for quick growth and high yield, businesses need to take certain precautions and investments in order to make a profit or, at the very least, break even to please the investor. Here are three ways businesses can ensure they are a good bet for venture capitalists:
Be Adaptable to Change
The key business lesson to take away from shake-ups and breakdowns of the past few years is that it’s important to react to the situation. Too many companies have failed to adapt their way of business or commerce only to fall into disrepair. Kodak, for example, failed to notice the digital boom and consumer thirst for digital products and were relegated to the business history books. Toys R Us is a more recent example of a business failing to dramatically evolve as the marketplace demands, leaving much of their business plan redundant with the consumer’s move to shopping online (like Woolworths before them). Indeed, with 60% of consumers preferring to shop online for entertainment, 43% preferring e-commerce for bigger electrical items, and 40% for clothing and footwear – together these make up a significant portion of the population who have moved away from physical shopping. Any physical business should have implemented a mass digitisation strategy in advance. The trick of succeeding in business is to anticipate the needs of the consumer. Investors need to know that you understand the changeability of the business landscape and have contingency plans in place for the shifts.
Be Future Proof
When it comes to investors, they need to know that they can make money in the future with a business so taking adaptability to change one step further sees us actively embracing new technologies. Investing in future technology goes hand in hand with defending against possible business environment shifts to help determine your own future and the future you will present to consumers. Pret A Manger are heavily investing in sustainability green schemes, following the trend towards corporate social responsibility. They offer 50p discounts with a travel mug and are implementing a plastic return scheme. For example, online casino provider Betway Casino embraced live streaming for their blackjack game, offering a live dealer option, to appeal to the millennial love of tech. The rise of blockchain cryptocurrency is also a factor – and Expedia have accepted Bitcoin payments since 2014, showing they were well ahead of the curve. Tesla, Toyota, Renault, Peugeot, and Hyundai, according to Next Green Car, have all developed eco-cars and are working on green technology, showing that their vehicles have a place in an inevitably more environmentally conscious future. Moreover, Primark are ahead of the ‘businesses should be sustainable’ trend by offering women’s health education to supplier countries, showing the ethical side of the supplier chain. Similarly, a company like Virgin is future-proof by hosting so many diverse brands under one company – media, airlines, trains etc.
Be Able to Sustain
Finally, a business is more likely to gain capital if the business plan involves twists, turns, and developments – as opposed to quick crazes such as loom bands, scoobies, or fidget spinners. Ensuring an enduring product lifecycle is critical to business success – as Kellogg’s mitigated against when Nutri-Grain performed worse than the other brands in the house. An investor needs to know that the investment will pay off not just in the next 12 months, but in the next 12 years – so businesses need to sustain momentum and consumer appeal. Console developers are prime examples of solid sustainability plans. The PlayStation was released in 1994 and Sony already had a plan for an adaptation, the PS2, which would take the roster of games and adapt those in 2000. This would then happen two more times over the next 13 years. Similarly, Microsoft developed the Xbox as a sustainable option for gamers – they were being sold the brand, not the specific console. So, as technology grew and gaming developed, the companies were able to offer a business model founded on the sustainable nature of what they sold and the problem they solved for the consumer: they were primarily a gaming powerhouse that offered entertainment however technology dictated it should come.
In order to receive the venture capital and to please investors, businesses need to show that they are ready for anything that may happen to the economic landscape. Whether their business is ready to adapt and evolve their strategy should unforeseen obstacles appear, or whether they should create their own adaptations in the industry to control the tide, or whether businesses simply need to offer a brand, service, or product that can sustain and weather the storm of the tumultuous business environment.