As the year draws to a close, it’s time to consider whether you’re happy with your company’s performance in 2024—and think carefully about your business goals for 2025 If one of your objectives is to find investors, then there’s no such thing as being “too” prepared before you start pitching. So, below, our business attorneys explain what steps you might take to get investor-ready for 2025.
Why Preparation Matters
It’s simple: investors care about managing risk and realizing their returns. From their perspective they’re taking a risk by investing in your business. And they want as much assurance as possible that it’s a good move.
What does this mean for you, as a business owner? Well, the first impression matters. You want to show investors that your business is a great investment––so the more prepared you are, the better. Follow the seven tips below to prepare effectively for pitching investors, and to give yourself the best possible chance of success.
1. Confirm You Are Ready for Investment
Securing investment is, of course, a huge milestone for any business owner. However, it’s not without its drawbacks. There’s more pressure to make a profit, for one thing. And some investors may want a say in how you manage your business, or which direction you’re heading in.
So, before committing to pitching investors, really think about whether investment is right for your commercial goals. Our experienced business attorneys are happy to help if you need more advice on such matters.
2. Review Your Business Structure
As your business grows, you might find that your current business structure no longer serves you. That’s why it’s very common for businesses to change organizational structures throughout their lifetimes.
For example, many startups choose an LLC in the beginning because of its simplicity. Later, when they’re seeking outside investors, they transition to a C-corp, which is the preferred structure for most venture capitalists.
How do you know when to change your company’s structure? Signs that you’ve outgrown your current structure include:
- Diversification: If you’re diversifying into new markets, then you may need a more complex business structure to manage the new operations.
- Growth: If your company is growing, then you may require a different business structure to cope with the expansion.
- Cash flow concerns: If you’re struggling to meet business debts and liabilities, then a change of structure could help you better streamline your resources.
- Personal asset protection: If you’re personally liable for business debt, then your personal assets may be at risk. Changing business structure allows you to protect your assets––and protect your existing owners.
Our business attorneys can help you determine if a change of structure is appropriate before seeking investors.
In the video below, learn how structuring your business as a Qualified Small Business (QSB) can make it more attractive to investors.
3. Evaluate Your Finances
Consider your company’s finances and do everything you can to promote its financial health. This means, for example:
- Checking you don’t owe any significant debts, such as tax penalties.
- Chasing outstanding payments and invoices to improve cash flow.
- Identifying ways to save money and streamline your operations.
- Looking for means to reduce your company debt overall.
The healthier your company’s finances, the more attractive it is to investors.
4. Check Your Bookkeeping
Investors will expect to see clear, detailed, and organized financial records before they decide to invest. Why? Because your books provide a clear insight into your company’s financial health. They signal to investors how well your company is performing––and what future growth is expected.
So, as part of your preparation, ensure any financial documentation you have is in order, such as:
- Invoices
- Payroll
- Accounts payable and receivable
- Financial reports
- Receipts
- Bank statements
And remember, this is a great time to get proactive about chasing outstanding invoices and streamlining expenditures.
5. Pay Your Tax Debts
It’s crucial that you pay any local, state, and IRS taxes on time. After all, investors may be deterred from investing in a business if you have tax debt or tax penalties.
The issue is, of course, that tax planning can be complex. With so many rules to follow, and deadlines to meet, it can be daunting to meet your tax obligations. Having an experienced tax attorney review your situation and assist with your tax planning can ensure you comply with your responsibilities––and stay on target for attracting investors.
6. Check Your Standing with the State
Investors want proof that you’re legally entitled to operate a business in a certain state and that you comply with state law, meaning you have:
- Filed any documents required by your state
- Maintained a registered office
- Filed annual reports on time
- Paid the fees required to operate legally
The easiest way to prove this is by obtaining a Certificate of Good Standing from the Secretary of State’s office. And if you already have such a document, check that it hasn’t expired—they don’t last indefinitely.
Do I Need a Lawyer Before Seeking Business Investors?
Technically, no. There’s no requirement to hire an attorney before you seek investors for your company. However, here’s why you might consider getting legal support before pitching investors.
- Efficiency: Whether it’s checking your standing with the state, or reviewing your existing contracts, preparing for investment can be time-consuming. An experienced attorney can expedite the process by handling these matters on your behalf.
- Compliance: Your lawyer will ensure that you’re meeting all relevant obligations, whether it’s your financial statements or your marketing compliance. This will help to convince investors that you are dependable, professional, and diligent.
- Reassurance: Taking your business to a new level can feel overwhelming. However, having a knowledgeable business lawyer on your side can make the process less daunting. You can approach every stage of investment negotiations with confidence.
And finally, remember, securing investment means entering binding legal arrangements with your investors. Our lawyers can ensure that you understand your obligations––and we’ll protect your legal interests when necessary.
Got Questions About Your Business? Contact Gordon Law!
The right investors can offer the insight, experience, and capital you need to grow your business. However, preparing your company to attract the right investors can be daunting. And that’s where Gordon Law can assist.
Whether you need advice on accounting and tax compliance, or you have questions about business structures, we’re on hand to help. Our business lawyers can guide you through the investment process so you have the knowledge you need to make the best decisions for your company.
Ready to review your business and seek investment opportunities? Call Gordon Law today or complete our contact form to discuss how we might assist you.
