As every writer knows, you need to keep your business in good order, well-stocked, with tech operating in good condition, and subjects close at hand. In much the same way, you’ll want to consider using a capital raising advisor when your online writing business is at the point of expansion. Maybe you’re considering expanding the reach of your business into additional channels, adding personnel, or creating a brick-and-mortar location in addition to the online business already in motion. Any of these reasons can bring you to a point of decision, and, if that decision translates into raising capital to expand, it’s time to call a capital raising advisor.
In addition to assessing your funding needs, it’s a good idea to know the general parameters of capital raising advisors and what that role can mean for your business. The primary responsibility of a capital raising advisor is to walk you, the business owner, through the process of preparing for a presentation to potential investors or lenders. The process isn’t quickly accomplished, nor is it an easy process; however, it does offer a complete picture of your business to the investors who want to assume the role of lending or investing.
To fully grasp the nature and activities of the capital raising advisor’s role, the following outlines the processes of the advisor on behalf of the business:
First, an overview of the details is prepared and the total amount of funding requested is set. The amount is typically based on expansion costs, plus the operational and overhead costs to support the expansion. After that, the advisor will begin by suggesting the best option for the capital raising of your business as follows:
- Debt capital raising – This form of capital raising is focused on the loan made by lenders to the company. Repayment schedules are prepared and interest is added. No stake in the company is offered; the interest-making opportunities are the focus of the investors or lenders.
- Equity capital raising – There are various forms of equity funding, most commonly offered as stock in the company. An owner will not typically offer enough equity to take over control of the business, but will include percentages that incentivize investors. Equity may or may not be repaid, depending on the deal made.
- Hybrid (Convertible) capital raising – The combination of both debt and equity funding is a beneficial avenue because it takes the best of both deals as it serves as a fresh source of funding for expansion.
- SAFE capital raising – Specifically designed as “seed funding” for startup companies, the Simple Agreement for Future Equity (SAFE) agreement is a statement of a loan or loans that are assigned to future equity. There is no valuation required with a SAFE method of fund raising.
After these decisions are made, the capital raising advisor will begin to research and collect information about your online writing business. The history of the company, data collection, significant benchmarks in business, prior fundings or loans outstanding, financial forecasts for the future, and other pertinent information is gathered and formed into a complete business review. The advisor will work with in-house staff to prepare a forecast of potential future earnings, as well. A full valuation of the company will be conducted and added to the investor package. This could take several weeks or months, depending on the circumstances of the business and the history it holds in commerce and financials.
As the presentation invitation goes out to investors, most of whom know your advisor, you will begin to rehearse your presentation of your business with your capital raising advisor. This ensures you are ready to both present the prospects and defend your answers. Questions will be asked that can be effectively answered and you’ll rehearse those, as well. At this point, with materials in hand and the company presentation ready, the advisor will step back, as this role is completed and, by law, the advisor cannot play any part in the presentation of the company to potential lenders or investors.
While it may add to the cost of expansion, seeking the assistance of a capital raising advisor is a wise expenditure. The advisor takes on the primary tasks of building the capital raise for your business, while you continue working on the present and future plans for expansion. This frees you to do what is most needed during this timeframe and allows the advisor to take on additional tasks as needed. Why use a capital raising advisor for your online writing business? For all the best reasons. Wishing you every success!