“Financial Measurements” Please respond to the following:
I think the most important financial measure to potential investors is the revenue in sales while the least important is the amount of other people buying shares in the stock market. While selling share in the stock market is great and can lead the company to huge opportunities, financial investors will not be so please unless the numbers of the company are high. The cost to make the product compared to the price it sells for and how much profit comes from that is the most important to these investors because they want to make sure they get their money back plus interest.
When Investors look at financial ratios they are more experienced and they can tell from the numbers where the company started to where they are going. Investors want to see the number increase, the more it increases the more likely they are to invest, this reassures them that they will receive their money back with interest or what ever deal they made with the owner.
Business owners do not look this closely and sometimes that can throw a business off, which is why a business plan with the financial segment should be throughly worked out, especially in case of failure. Business owners looks for their profits, what they will be making after paying all of their bills and inventory, they often look for how life will look in a couple of years and so on.
“Seeking Investor Funding” Please respond to the following:
I believe that the key points that should be presented to investors are sales reports, graphs, production costs, and future projections. Sales reports are important because they show perspective investors how much money the business has been making. Production costs would include creating the product and buying the ingredients that are necessary to create the product. Future projections would show where you as a business owner would expect the business to be in the next 2-5 years. All of the for mentioned key point are important because they could be used to draw in investors, suppliers, and/or employees.
1.) Bankers 2.) Suppliers 3.) Angel investors 4.) VC partners 5.) Potential key employees.
I put them in this order according to what I could deal with as a business owner. I could deal with bankers much easier because with bankers it is all business there are no personal feelings involved and it is very simple. They loan money and the person that the money is loaned to pays the banker back what they owe. It would be good to have a good working relationship with suppliers because as a business owner I may need to work with them again in the future and both parties would benefit. Angel investors are third because they can become very involved in the business that they invest in. VC’s are fourth because they are in direct competition with angle investors. Lastly, I would least of all want to take funding from potential employees. The key word is employees they are supposed to work for me and if they help fund my business then they would be more than employees.