Is your startup or online business trying to raise money? Are you looking for angel investors, venture capital or crowdfunding? If you are, better “get your house in order” and “your ducks in a row”.
Your potential partners will want to look over your business, go through the books, check your documentation and do their due diligence. And the more money you plan to raise, the more intensive this due diligence will be. So be prepared with professionally-written agreements, a written and up-to-date business plan, audited accounts, etc.
Here is a quick checklist (of often overlooked items) that will give your investors confidence that you’re running a professional startup:
1. Business Name Registration: You need to show you have registered your company or business name, as well as your website domain name. If you are an e-commerce website, you need to register for GST too. If you’re unsure, get advice. You don’t want a surprise liability to the ATO!
2. Clear Ownership of Assets: Investors want to be sure of what they’re buying and this includes ownership of assets such as: company logo, website design, software code and any other intellectual property. This is sensible protection for your business even if you’re not looking for investors.
3. Professional Legal Agreements: Your business relies on a web of suppliers, contractors, service providers and key employees. Make sure you have water-tight and professionally-written agreements with each of them. This will give investors confidence that you have built your business professionally and on a solid footing.
4. Audited Financial Accounts: Your financial statements, account balances, invoices and tax returns should all be up-to-date, easy to understand and audited by your accountant. Using a cloud accounting service like Xero makes this very easy. So if you’re falling short, get some professional help immediately.
5. Up-to-date Business Plan: Startups and online businesses often need to adjust course and adapt to different market opportunities. Make sure you have a written plan – it doesn’t need to be long or complex – and keep it up-to-date as your business grows. And Investors want to know what you have planned for their money so your future business strategy should be clear.
Now is the time to organise and clean up your business. Don’t let it grow like a weed and without proper documentation. If you can show that you’ve done everything professionally and correctly right from the start, your investors will have greater confidence and be more likely to invest. And don’t be seen to be scrambling to put together your business files at the last minute.