How do I know if I need investors for my growing startup that I personally funded?

I've never done this before, how do I know what I need, and where do I even start? A cash injection would greatly increase our sales, our marketing efforts, and staffing requirements. What could be my next steps?

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6

Ask yourself is you are satisfied with your current situation. If you are then you only need to plan for sustenance of the current situation. This can mean that you have to grow if you will otherwise be put out of business but that would depend on your situation and forecasts.
Otherwise you simply have to do some financial planning. Calculate how much your revenue will increase when you put in an X amount of money and find the optimal mixture of investments versus costs.

Thanks Daniel. I dont believe I may ever be 'satisfied' until I can earn enough in the business to completely replace myself from within the ranks. Currently, the business makes enough to cover my living costs, some web design and basic SEO, and the cash I need to continue to build a manufacturing building. The other building takes the lion's share of my earnings.
As you recommended I should revenue increase but with the current situation, I can only handle this much work. A direct investment would help me source and hire the right staff (not easy in Bali) and also ramp up my marketing efforts. But Im not sure who to go to or how to secure this.

I see what you mean. I suspect your location indeed might make things more difficult. In this case you may want to start looking for an angel investor, though they usually want a significant return on their investment (usually company share) they often not only bring in enough capital to grow but also knowledge and expertise to secure their investment. You will still need a good investment plan in which you show how the money will be invested and how this will affect the ROI. Make sure you can also present valid research so the investor(s) know that you are not just "pulling the numbers out of thin air" so to speak.

Great idea, and again thank you. I will need to do some digging and more networking here in Bali, and maybe broaden my search to mainland Indonesia.

5

Hi Luh, once you get out of the startup phase, the best way would be to work on a complete business plan. Once you have established how you are going to gain additional customers then you will know what resources you will need to gain the business, whether it is sales, marketing or more staff.

This is the best way to get organized so you can work it out on paper before you borrow money from investors or the bank. Investors and/or bankers will need your business plan in order to decide whether to invest in your company. You may find our blog on business planning of help.
http://xlconsultinggroup.com/starting-business-9-easy-steps-creating-killer-business-plan/

Thank you Elaine, and the post about business plans was perfect.
Currently, I may be over stretched in terms of my own resources on time and my sales skills. My website is ranked first on search engines and we take in about 15 inquiries per day, resulting in about 3 serious leads which turns into 1 contract - this generally takes about 2 months (our agent fee gets paid here). But the commissions earned from the production can take up to 4 months because we get paid these on production. So although there is quite a bit of activity, I myself am not an experienced sales person so I dont feel like Im closing as many contracts as I should be. But hiring experienced people in Bali is difficult at best. I was thinking if I had a cash injection then the right person can be brought in and others to then assist them. Then I could also focus a bit more on marketing efforts to get wider exposure.
I feel like I may be missing some thing....?

Hi Luh, What you are looking for is turning the sales funnel into paid customers as quickly as possible so you shorten the sales close cycle and maximize your production facilities. If you cannot find experienced sales closers in Bali, then I would look further afield. At the beginning you might want to use commissioned sales agents. They usually represent 3 or 4 different companies (in the same general field but not related). You could choose a commissioned sales agent with experience in your target market. For example if your target market was the US or Canada, find an agent in either of those countries. You could post the project here on Mosaic Hub, or search on LinkedIn. If you need help hiring an agent let me know and I'll connect you with some HR professionals.

Thats a great idea Elaine. I would love to work with others from Canada, Europe, and/or the USA. Im about to start looking and connecting with professionals online and I will learn now how to post a project on mosaicHUB. I would love to use an HR firm but Im concerned the costs of finding and hiring staff through them may be prohibitive?

4

Write a business plan and create a financial forecast - both exercises will make you think about how much cash you will need and the available sources. If you are not sure where to start with your forecast speak with a qualified/ designated accountant. Make sure they help you to create a forecast and do not take this process away from you - you need to understand every aspect of your forecast and agree that the forecasted results are achievable.

Thanks Rod. My projections are realistic and achievable, we used the S.M.A.R.T. Objectives model. I can see the amount of money the business needs in order to grow into its next phase, hiring other experienced people, but Im just not sure what steps to take to get myself there.

4

Do you have a business plan with short and long range financial projections? For a new business it is all about cash flow. You need enough working capital to fund your ongoing operations (payroll, rent, utilities, raw materials, supplies etc.) and then you can figure out if you need or can afford more capital to fund expanded staff, capital equipment etc.

Feel free to reach out to me if you want help getting started with your plan.

Thanks Charles, and thanks for the offer as well. The plan is set and the money coming in would normally be perfect if I wasnt funding the building of our new facilities, which takes longer here because, well its Bali. But the sales activity level may have hit a cap with my own time and skill resources so I feel things could be moving way better and growing way faster still - the market is ripe and we have a lot of interest and clients coming on all the time. Im looking to hire someone to handle all the incoming inquiries; we get about 15 inquiries per day from the website. But if I could find a cash injection to catapult the increase in sales and marketing man power, we could be seeing a greater increase in revenue.
I suppose I simply need to be more patient and continue networking in hopes of either finding an experienced sales/marketing person to work for CMAB at lower than "western" wages, or find the cash from investors.

3

There are different way of doing startup, one of the way people love is doing same as you bootstrapping yourself, which gives you full freedom and control. It also depends on the nature of business and your capacity. After time, when you felt your capital/cash would not enough to get what you are looking for, you need investor. So for the term investment, the most important questions are How much money you need to raise, From whom you want to take money? How fast your investor can arrange?
So i suggest you to calculate your current position, your target revenue, cost you need to achieve it.

Thanks Prakash. I feel like I understand the numbers a bit more since speaking with some contacts. But I still dont have any investor types around me and the business needs the injection sooner than later if it is to grow bigger now. Since we're a service agency, investors apparently aren't as interested. But because we're in clothing manufacturing I was hoping there were interested parties. I simply dont know where to look or how to access the right people. Any recommendations?

3

Slow growth or rapid growth which has more appeal? The whole cake or a small slice of an enormous cake? Control of the company or the risk of being ousted by the new board controlled by investors? Can you finance the company's growth from revenues and debt if so you do not need investors.

Thanks Roy. Rapid growth is what Im now aiming for. In the early days, I took on a lot of clients and still today the business makes enough money for me to live and build another manufacturing building - this project was already started last year. I know that eventually I can finance the company from revenue but the speed at which this is happening is very slow, and Im not being impatient. I would love to take the business to the next level but I believe I need a quick injection of cash to accomplish the next goal which is to become Bali's largest manufacturing facility and eCommerce business. The eCommerce is to answer a need in the market at the moment. What do you think?

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