Congratulations, you've secured an investor! It probably feels a bit like that time you took money from your grandmother to buy candy: what possibilities you have! With the money you have now secured, you can do a whole lot. To increase the chances of success for your business, however, it is advisable to spend it on the right things. We would like to give you a few suggestions to put your investment to good use.
The main question
With every euro of your investment that you spend, you should ask yourself an important question: does this expenditure contribute to the picture that I have outlined in my business case? In this way, you ensure that you spend the money only on the things that contribute in the long run to the picture of the future you have in mind.
For many entrepreneurs who have growth ambitions, it makes sense to spend the investment on personnel, office space, market research and marketing.
In your business case, you've thought about the team you need to bring your plans to fruition. That's why you set about finding the right people as soon as possible! Investing in staff pays off, especially if they bring knowledge not already present in your company. You can also invest in developing the staff you already have.
Good to know is that finding and on-boarding the right staff often takes longer than you think. So while it is an important investment, it is good to be aware that it does not provide an immediate return.
Chances are you started at the kitchen table. Then you probably figured out pretty quickly that an office would be nice after all. And now you're running into the same problem again: as your team and business grow, your current office space isn't adequate. Therefore, it is convenient to invest in a new office, where there is enough space to continue growing. Ideally, buy or rent a location where you have so much space that you can fulfill the plans in your business case.
While setting up your business case, you already researched the market. Then you found out that there are enough people who want to buy your product, otherwise you probably wouldn't have brought in investment. But times change, so it's important to keep doing regular market research.
Of course, you should continue to invest in the further development of your product. But keep making sure you have a good product-market-fit, before you start focusing entirely on supply-driven development of your product.
After funding is raised, the focus becomes more on sales. Don't wait too long to set up and start your marketing campaigns. It often takes a while before you have enough traction to generate brand awareness, especially online. Perhaps you can come up with a campaign where you can generate early interest in your product. Also, remember that you only make a first impression once, so make sure in your communications that you look good to your target audience right away.
Special point of interest: effective spending
It makes perfect sense to spend your investment on the above points, but it is important not to do so indiscriminately. With a bit of bad luck, you will have lost half your investment on marketing, without generating 1 paying customer.
Therefore, with every expense, make sure you know the purpose for which you are spending the money. What is the return you are looking for? For example, do you have insight into what a euro invested in marketing will get you? And what do you do if your spending does not have the desired effect? The same applies, for example, to the staff you want to hire: since they do not provide an immediate return on investment, it is important that you know in advance how they should develop and what contribution they will make to your future image.
What it all boils down to is that you need to manage your money wisely. Sure, you can buy all the mints like a kid in the candy store, but will that make you happy in the long run?
Become investor ready?
Not ready to have your first investor tied to you yet? No problem. In our white paper we tell you exactly what needs to be done to become investor ready. Download it now!
In this white paper:
- What challenges do you face and how do you deal with them?
- Becoming investor ready in four steps!
- An overview of all funding options
Please note that this whitepaper is only available in Dutch at the moment. We are in the process of translating this whitepaper.