Growing a business can be exciting and terrifying. When you’re starting out you need to focus on cash flow, and what’s best for your business and its future. But, what if you could somehow bypass aspects of the growth phase due to outside investment, is it worth the reward?
Recently we reached out to Jeff Skeen, the president and CEO of Fitness Connection, who has worked with investment groups. He gave us five things to ponder when considering private investment:
- Do you want to be a majority or minority owner? Depending on your answer, you may find that you are limiting the firms that will invest in your company.
- Does the firm share your same values and do you enjoy spending time with the individuals assigned to your company? Bringing on an investor is much like getting married; therefore, it is very important that you enjoy spending time with your partners.
- Will the investors bring value to the partnership? It is one thing to look for money; however, it is another to find “smart” money. When looking for investors, find ones that will not only provide you financial capital, but will provide intellectual capital.
- Are your company and the firm’s strategies aligned? If you only want to open new locations, but the firm wants to only grow through acquisitions, the partnership will not work well.
- What is the firm’s exit plan for their investment? Funds the firm manages are set up differently, depending on the group’s investment into the fund. Some funds have no requirement to sell in a certain period of time, whereas others do.
Taking on outside investment or private equity can drastically change your business. Do yourself a favor and consider the above before you marry into a commitment.
