Ask And You Shall Receive: The Power Of Questions In Attracting Investments

Investors will often ask a lot of questions before deciding to invest in a company. This is because they want to know all the things that the company's pitch deck might have left out, and how the company came up with the assumptions it made. Therefore, it is likely that investors will be more inclined to invest in a company if they ask questions, as it shows that they are interested and engaged in what the company has to offer.

What is the company's sales projection for the next 12-24 months?

Forecasting sales for the next 12-24 months is a critical aspect of financial planning for any company. It involves predicting future sales revenue based on historical data, market trends, and other factors. Here is a detailed guide on how a company can approach sales projections for the upcoming 12-24 months:

Data Collection and Analysis:

• Historical Data: Begin by gathering and analyzing data from previous sales cycles. This includes sales figures, revenue, units sold per month, and customer returns or cancellations. Having at least three years of data allows for a more accurate projection.
• Market Trends and External Factors: Consider broader market trends and external factors that may impact sales. This includes economic conditions, industry growth or decline, consumer behaviour, inflation rates, competition, and seasonal variations.
• Internal Factors: Evaluate internal company factors such as new products or services, changes in pricing, sales and marketing strategies, and the performance of the sales team.

Choosing a Forecasting Method:

There are several sales forecasting methods available, and the choice depends on the company's specific circumstances and goals:

• Opportunity Stage Forecasting: This method is ideal for businesses using CRM systems. It assesses the likelihood of sales closing based on the different stages of the sales pipeline.
• Pipeline Forecasting Method: Similar to opportunity stage forecasting, but with a greater focus on the volume and quality of leads at each pipeline stage.
• Length of Sales Cycle Forecasting: A straightforward method that analyzes the duration of past sales cycles to predict future ones. Effective for businesses with consistent sales cycle lengths.
• Intuitive Forecasting: Relies on the expertise and intuition of sales managers and their understanding of market research and customer behaviour. Often used alongside other data-driven approaches.
• Historical Forecasting: Uses past performance data to predict future sales. Best suited for businesses with ample historical sales data and stable markets.
• Multivariable Analysis Forecasting: Analyzes multiple factors, including market trends, economic conditions, and marketing efforts, to provide a comprehensive view of potential sales outcomes.

Creating the Sales Projection:

• Define Time Periods and Categories: Decide on the sales cycle (month, quarter, or year) and the categories of products or services you want to forecast. For example, a restaurant might forecast sales for food, drinks, and catering separately.
• Estimate Sales and Revenue: Using the chosen forecasting method(s), estimate the number of units expected to be sold and the revenue generated for each category in the defined time periods.
• Consider Costs and Profit: Determine the cost of producing and selling each good or service and calculate the estimated profit.

Refinement and Adjustments:

Sales projections should be regularly reviewed and updated based on actual sales performance and changing market conditions. Compare the projected sales with the actual sales figures to identify deviations and make necessary adjustments to the sales strategy.

In summary, sales projections for the next 12-24 months are essential for financial planning, resource allocation, and strategic decision-making. By following the steps outlined above, a company can make informed predictions about future sales performance, which will help guide their business decisions and goals.

What are the risks associated with sourcing raw materials?

Sourcing raw materials is a critical aspect of any business, and it carries various risks that can impact the company's operations, reputation, and profitability. Here are some of the key risks associated with sourcing raw materials:

• Supply Chain Disruptions: International sourcing carries higher risks due to longer transportation lead times. Quality failures or disruptions from international sources can result in serious delays, with potential months-long rectifications. Political instability, weather conditions, and shipping complications can further exacerbate these delays.
• Intellectual Property Risks: Sharing information with suppliers in countries with weaker intellectual property rights enforcement can lead to proprietary information leaks. This is a significant challenge, especially when outsourcing manufacturing processes.
• Reputational Risk: Human rights violations, including poor labour conditions, underage workers, and environmental damage, can severely damage a company's brand image and reputation. It is crucial for companies to thoroughly investigate and ensure compliance with their code of conduct and ethical standards throughout their supply chain.
• Ethical and Environmental Risks: Many raw materials are associated with illegal practices, human rights abuses, and environmental degradation. For example, cobalt sourced from the Democratic Republic of Congo may be linked to conflict areas and militia interventions. Similarly, the extraction of rare earth minerals can result in biodiversity loss and pollution from waste and toxins.
• Traceability Challenges: Establishing a transparent supply chain is essential for responsible sourcing. However, this can be challenging, especially in fragmented markets like coloured gemstones. A lack of supply chain visibility makes it difficult to ensure ethical sourcing and can lead to reputational risks if unethical practices are discovered.
• Quality and Standards Compliance: Sourcing raw materials that meet quality standards and comply with environmental and social impact regulations is essential. Non-compliance can result in legal consequences and negatively impact a company's reputation.
• Transportation Costs and Carbon Emissions: Sourcing materials from distant locations can incur higher transportation costs and carbon emissions. This is particularly relevant for companies sourcing materials internationally.
• Supplier Dependence: Developing a strong relationship with suppliers is crucial. However, companies may become dependent on specific suppliers, potentially limiting their flexibility and negotiating power.
• Local Sourcing Challenges: While sourcing locally can reduce carbon emissions and support the local economy, it does not guarantee ethical sourcing. Local suppliers may still engage in unethical practices, and it is essential to conduct due diligence and ensure responsible sourcing, regardless of the source's location.

To mitigate these risks, companies should conduct thorough due diligence, perform supplier audits, establish strong partnerships with suppliers, promote supply chain traceability, embrace sustainable alternatives, and continuously monitor and improve their sourcing practices. By addressing these risks, companies can contribute to a more sustainable future and enhance their reputation and competitiveness.

What is the company's plan for future growth?

A company's plan for future growth is essential for its success and longevity. It provides a roadmap for the business to expand, increase revenues, and achieve its objectives. Here are some key components and considerations for a comprehensive future growth plan:

Timeframe

Future growth plans typically cover a relatively short timeframe, usually one to two years. However, some businesses may create plans that extend beyond this period to accommodate their specific goals and strategies.

Value Proposition

Articulating your value proposition is crucial. Identify what sets your company apart from the competition. Do you offer better prices, superior knowledge or expertise in a specific area, exceptional customer service, or a unique product or service? Ensure that your value proposition is clear to your target audience and investors.

Target Audience

Once you understand your value proposition, you can identify your ideal customer or target audience. This involves researching their preferences, behaviours, and engagement channels. By understanding your target audience, you can develop effective marketing and sales strategies to reach them.

Revenue Streams

Evaluating and optimising revenue streams is vital for growth. Analyse which streams are successful and which are underperforming. Identify new revenue streams that can be added and maximise the potential of existing ones. Regularly monitor and adjust your revenue streams to adapt to changing market dynamics and customer behaviour.

Competitive Analysis

Learning from your competitors is an essential aspect of future growth planning. Identify successful businesses in your industry and analyse their strengths and weaknesses. Determine where they excel and where they fall short. This information will help you maximise your value proposition and talent acquisition strategies.

Talent Acquisition and Management

To support your future growth plan, you must assemble a talented and skilled workforce aligned with your goals. Identify the skills and expertise required to achieve your objectives and hire accordingly. Also, consider the importance of skilling up your employees to be agile and adaptable to different functions within the organisation.

Financial Planning

Financial planning is critical to future growth. Determine the funding sources for expansion and detail how you plan to allocate financial resources. This includes deciding how much will be spent on salaries, overhead costs, and expansion initiatives. Be prepared to address potential challenges, such as not securing the full amount of funding requested.

Marketing and Sales Strategy

Developing a targeted marketing and sales strategy is essential for growth. Outline the channels and messaging you will use to reach your target audience effectively. Consider the role of digital solutions and omnichannel approaches to maximise your reach and engagement.

Milestones and Metrics

Establish clear milestones and key performance indicators (KPIs) to track your progress towards your growth objectives. These milestones will help you monitor your success and make any necessary adjustments to stay on course.

Risk Assessment and Mitigation

Identify potential risks that may impact your growth plan and develop strategies to mitigate them. This includes assessing the competition, market dynamics, and economic factors that could influence your business's performance.

Investor Relations

Future growth plans are essential for attracting investors and securing funding. They provide investors with a clear understanding of your company's direction, objectives, and potential returns. Be prepared to address investor concerns and queries and showcase how your growth plan aligns with their expectations and portfolio.

In conclusion, a well-thought-out future growth plan is a critical tool for any business aiming to thrive and succeed in its industry. It provides a strategic roadmap to achieve expansion, revenue growth, and long-term sustainability. By addressing the key components outlined above, companies can effectively chart their course toward success and create a compelling case for investors.

Who are the company's competitors?

Knowing your company's competitors is essential for improving your marketing, sales, conversion, and retention strategies. By studying your competition, you can gain valuable insights into industry trends, common mistakes, and effective strategies.

There are several ways to identify your company's competitors:

• Direct competitors: These are companies that offer the same or very similar products and services. For example, if you own a pastry shop, your direct competitor would be another pastry shop in the same area. Examples of direct competitors include Apple and Samsung in the consumer electronics industry.
• Indirect competitors: Indirect competitors sell similar products or services, but not as their primary focus. For instance, a supermarket that sells pastries would be an indirect competitor to a pastry shop.
• Replacement or substitute competitors: These companies sell products or services that are somewhat different from yours but address the same pain points. For example, a health food store doesn't sell pastries, but it keeps people fed, so customers may choose to go there instead of a pastry shop.
• Search engines: A simple Google or Bing search using your main product or service keywords, along with your location, will likely reveal your top competitors. The first ten companies listed in the organic search results or the ads above them are probably your direct competitors.
• Customer surveys and feedback: Your customers can provide valuable information about the competition. Conducting surveys or instructing sales reps to ask customers about other businesses they considered before choosing your company can help identify competitors.
• Market research and analysis: Market research and analysis tools, such as IBISWorld, Mergent Online, and business databases, can provide information on competitor companies and industries.
• Social media and online forums: If your target audience is active online, you can check groups and communities where customers seek advice or share reviews. This can help identify who your audience perceives as your competition.
• Business directories: Local business directories like Yelp, Google, and Yellow Pages can help you find local competitors, along with reviews and other valuable data for competitive analysis.

Additionally, there are various online tools specifically designed to help identify competitors, such as SpyFu, SimilarWeb, STAT, Crayon, SEMrush, Ahrefs, and Meltwater.

What is the company's marketing strategy?

A company's marketing strategy is a crucial aspect of its overall business strategy and can be a deciding factor for investors. Here is a detailed breakdown of what a company's marketing strategy might include:

Market Analysis

A company should begin by thoroughly understanding its target market, including customer demographics, preferences, and behaviours. This analysis helps identify the specific customer segments the company aims to target and enables the creation of tailored marketing messages that resonate with these audiences.

Competitive Analysis

Conducting a competitive analysis is essential to identify the company's position in the market relative to its competitors. This involves researching competitors' products, pricing, marketing strategies, and market share. By understanding the competition, a company can develop a unique selling proposition and differentiate itself in the market.

Marketing Mix

The marketing mix, often referred to as the "4 Ps," consists of Product, Price, Place, and Promotion.

• Product: This refers to the goods or services the company offers, including their unique features and benefits. A clear understanding of the product helps define the target audience and develop effective promotional strategies.
• Price: Pricing strategy is critical, as it impacts profitability and customer perception. A company must consider the production costs, market demand, and competition when setting prices.
• Place: The "place" or distribution strategy outlines how the company will deliver its products to the target audience. This includes decisions about sales channels, such as online stores, retail outlets, or a combination of both.
• Promotion: This involves creating awareness and generating interest in the company's products or services. Common promotional tactics include advertising, public relations, sales promotions, and digital marketing.

Customer Engagement and Retention

A company's marketing strategy should also focus on building long-term relationships with customers. This includes strategies for customer engagement, such as loyalty programs, social media interactions, and personalised marketing. By providing excellent customer service and meeting customer needs, a company can increase customer loyalty and repeat business.

Performance Measurement

Finally, a marketing strategy should include methods for measuring the effectiveness of marketing campaigns. This involves setting key performance indicators (KPIs) and utilising analytics tools to track metrics such as website traffic, conversion rates, and customer acquisition costs. These insights help identify areas for improvement and optimise future marketing efforts.

In summary, a company's marketing strategy encompasses a range of activities and considerations, all aimed at effectively promoting its products or services to the target audience. By developing a comprehensive marketing strategy, a company can attract investors by demonstrating a clear understanding of its market, customers, and the steps needed to achieve its business goals.

Frequently asked questions