When you are running a business, you will surely make an effort to make it grow. However, there are instances wherein you need to seek the help of investors to fund the projects you have in mind to grow your business to scale such as launching a new product. Before any investor takes a risk with you though, they will definitely review your financial report. This article lists down some of the things that investors will look for in your financial report.
Net Profit
One of the primary things that investors will most likely look for in your financial report is the net profit of your business. This is where financial modelling services from the experts prove to be beneficial because, with their help, you will be able to present a clear picture of your net profit forecast based on historical sales data. As much as possible, your net profit should be positive because the first thing that investors will most likely ask you is whether you are making money from your business. Otherwise, it may be more challenging to pursue them to invest.
Sales
Another item that investors will most probably look for in your financial report is your sales. The reason behind this is that you may have a wonderful product or you may be offering the best service, but the investors will surely ask you whether people are buying your products or subscribing to your service. For this reason, you must establish a good track record of your sales in your financial report because investors won’t take a risk for any product or service that is not saleable.
Margins
When you present your financial report to potential investors, make sure that you include both your overall profit margins as well as your individual product profit margin. Most investors will compare the data you present to them with the industry standards as well as other investment opportunities. If they deem that your business has lots of potential based on their comparison, then they will most likely put some money into your enterprise. In case you have a low margin, then make sure that you define a clear plan on how to improve it.
Cash Flow
The lifeblood of every business is its cash flow, which is why you need to be able to present a solid five-year cash flow plan to your investors if you want them to take a chance in your business. As much as possible, you need to have an emergency fund for your business because investors will be scrutinising how you will be able to handle unforeseen circumstances. Aside from this, if they deem that you have a free cash flow Express Finance Secured Loan, then you will be in a better position to capitalise on new opportunities coming your way.
Final Word
When it comes to your company’s financial report, the things listed above are only some of the items that investors will most likely scrutinise. They may also look into your debts, accounts receivable turnover, break-even point, as well as your personal investment. Rest assured that as long as you present a financial report that is clear and concise, you will be able to encourage investors to take a risk with your business.
