Scale-up Business Guide to Getting Investor-Ready: The Customers

For any investor-ready business you need to have a complete understanding of who your customers are. Who you are targeting and who already is buying your service or product. 

For this reason, investors are looking to see that you understand your customer before giving funding to your Scale-up. If it is clear that your business doesn’t have a full grasp of your customers – who they are? will they repeat buy? will your customer base base grow? – then you’re likely to be unsuccessful in your pitch attempts. 

This article will give you tips and advice on what it takes to be investor-ready when it comes to knowing your customers.

Who are your customers?

You need to begin with this question, though it sounds very obvious and simple. It’s surprising how many businesses take their customers for granted and don’t have a full understanding of who they are. If you don’t know who your customers are then you will find it difficult to expand your audience base and achieve business growth

You should also be knowledgeable about who you want your customers to be in the future – in order for you to strategise to increase your audience. 

Your business may be selling to consumers – individuals who like your products or services and therefore buy it. What you need to have a deep understanding of is why they like your product/service. Or perhaps there are ways to improve in this area.  Customer loyalty, so they repeat purchase and tell other people about your business, is ultimately your aim.

Alternatively your business could be selling to other businesses but the logic is still the same – you need to understand why your business customers are coming to you for your product or service.

Of course you can be selling to both consumers and businesses but it is essential that you understand who your customers are and what your business can do to keep them. 

The key is demonstrating to the potential investors that you know enough about your customers for your business to be viable and scaleable. You need to convince them you’re investor-ready without going overboard.

investor-ready

How do you reach your customers?

Once you’re certain who your target audience is you then need to fully understand how you reach them. Again, this can be what you’re doing already or what you plan to do with the investment. 

Perhaps, if you already have a consumer base, they’ve been attracted to your product/service by a strong marketing campaign. You need to know how they were attracted in order to strategise for the future.

If you sell, or plan to sell to businesses you may reach your audience through completely different ways – for instance trade shows.

The investors need to see a clear plan, based on previous success or diligent preparation, for how your business is going to reach future customers. Your pitch may be fool proof in every other area but if you’re not clear on how to get customers to buy your product or service, you won’t be investor-ready. 

Who are you up against

You need to always be aware of the market your business sits in. You need to know almost as much about your competitors as you do about your own business because this is how you will get ahead of them. 

For instance, in terms of marketing – if a competitor offers a similar product or service then you must look at their marketing. Is it successful? Can you find a way to separate yourselves from them and create the appearance that what your business offers is far superior to the rest of the market. 

It comes down to the very basic question that you have to ask yourself as a business; why should the customers choose you? Once you answer that, you need to funnel that into your marketing strategy because the customers are the people you need to convince. 

investor-ready

To sum up

Investors want to be assured that you understand who your target customers are and how to reach them. They need to have faith in that fundamental aspect of your business in order to invest. 

It is your job to do the necessary prep in order to understand your target customers and how to reach them but it’s also your job to convince the investors of these two things. You need to show that you’re investor-ready. Within your prep you must get to know your competitors in order to out-manoeuvre them and convince the customers to come to buy from you. 

A lot of this is to do with marketing and if that isn’t a strength of your business then it’s important that you bring in help. You can hire a Part-time Marketing Director that can come in and help you both develop your marketing strategy but also prepare you for the marketing side of your pitch. 

Getting investor-ready? Read more about:

The People

The Raise

The Pitch

The Marketplace

The Financials

The Plan for Exit

Written by: John Courtney

John is highly ranked in the Top 100 UK Entrepreneurs list by City AM and is winner of the Lifetime Achievement Award from techSPARK. He has been a Board Director himself for over 40 years and first started placing Non-Executive Directors over 25 years ago. John founded and ran six of his own businesses including a Management Consultancy for 10 years, a Corporate Finance offering for 10 years and a mid-sized Digital Agency for another 10 years.