Growing businesses need capital to expand and further cement their place in the market. Whether you plan on spending the cash you raise on advertising, new equipment, or acquiring top talent, raising capital doesn’t happen overnight. At this time, it’s easy for your own costs to escalate and get out of hand. Although spending money is a necessary part of growing your business, there are ways you can minimise your costs during the capital raising process.
1. Do your research
It’s always important to do your research when looking for investors. Make sure you take the time to learn what’s involved in a successful pitch and research the type of investment you’re after. Doing this will save you costs down the line. We all know that time is money, so it’s important to dedicate your time to raising capital from suitable sources. If you go in unsure of what type of investment you’re after, you may find yourself spending money to get information that you could have found yourself.
2. Find a cost-effective lawyer
Getting legal advice can be expensive, and this is especially true when it comes to paying by the hour. Although you should definitely seek professional advice when raising capital, it’s much more sustainable to know what you want advice on and how much your lawyer will charge. Many lawyers these days charge on a fixed-fee basis, meaning that you’ll know how much to budget for legal expenses and not be hit with any nasty surprises at the end.
3. Protect your intellectual property
When pitching to investors, you’ll inevitably be giving them access to your intellectual property. What you should also keep in mind, however, is that you don’t know who else your investors are doing business with. If your logo or business name does not have trademark protection, you may find yourself paying thousands of dollars when you see a competing business suddenly using an idea that is markedly similar to yours. Further, having legal protection for your intellectual property will give your brand value increasing its legitimacy to investors.
4. Understand your obligations under the Corporations Act
Depending on the type of company you run, there may be certain legal documents (such as a prospectus) that you have to give to potential investors when raising capital. This mainly applies to public companies, but it can also be useful if you’re a private company. As a private company, you’ll want to ensure you’re providing potential investors with accurate and truthful information.
5. Issue NDAs
Along with your intellectual property, you’ll also be providing potential investors with confidential information during the capital raising process. Whether it’s your revenue forecasting, planned product releases or growth plans, this is probably information that you don’t want the general public to have access to just yet. Issuing investors with NDAs will protect the information you divulge, and save costs if you want to prevent information getting out further down the line.
This article was contribuited by our friends at Lawpath
Lawpath is Australia’s leading provider of online legal services for businesses and individuals, providing technology powered legal solutions at a fraction of the time, cost and complexity of the traditional system.
