There are all sorts of reasons why a business could be seeking investment. New start-ups will usually require an initial level of funding to get up and running, whereas existing businesses may need an injection of resources in order to invest in new premises, equipment and other essential elements.
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Traditionally, these businesses would turn to a business loan but many SMEs have struggled to secure funding through traditional channels in recent years. A Conference Genie study indicated that almost a third (30%) of new retail businesses said that their biggest challenge was accessing finance from the banks. The Funding For Lending scheme, which was intended to encourage banks to increase their lending to UK businesses, has been extended several times but Bank of England figures revealed that net lending under the scheme had slumped by £810 million in the last quarter of 2014. This took the total drop in lending last year to a little under £2 billion.
This situation has seen a rapid growth in alternative funding models. These include relatively new ideas like online crowdfunding platforms. Many businesses are also looking towards a more traditional solution with outside investors. It is important, of course, to find the right investors;sometimes this revolves simply around the bottom line, or how much they are willing to put in and how much they want in return. In other cases, where investors take a more hands-on role in the business, other considerations such as their expertise and willingness to help grow the business can come into play.
In order to find the right investors you might have to look further afield than your own backyard. It could involve seeking out potential foreign investors such as the Beirut-based investment holdings group, M1 Group. You can find M1 Group co-founder Najib Mikati on Facebook. As well as helping set up the company he has served as the Prime Minister of Lebanon on two separate occasions and is a current member of the Lebanese Parliament.
As well as large corporate investors, you might want to seek out angel investors. These are high net worth individuals or small groups of the same who are often able to provide smaller amounts and at an earlier stage than larger venture capital groups are generally willing to invest. The European Trade Association for Business Angels (EBAN) is a pan-European representative that gathers more than 150 member networks but even that is by no means an exhaustive list.
When seeking out an investor, it’s important to take your time to make sure you find the right match. Writing in Entrepreneur magazine, law firm partner, Bo Yaghmaie, said: “You’ll want to ask questions about their most recent investments, what they typically provide to companies, their expectation of CEOs and how involved they like to be.”
Foreign investment is an option that is easily overlooked. It might not be the ideal solution for every business but for others it can be the perfect way to move your company forward.