There's still money to be made in the Cotswolds
PUBLISHED: 12:16 17 December 2010 | UPDATED: 15:20 20 February 2013
Getting funding for your project is still the key issue for any budding entrepreneurs hoping to set up in business
There's still money to be made in The Cotswolds
The value of property might be dropping, utility prices might be on the up, but don't despair - there's still money to be made out there.
Historically, more businesses are born in difficult economic times than at any other time, according to Michael Howes, Managing Director of Pilot Cottage, the business coaching and investment readiness company that helps Cotswold entrepreneurs to grow and finance their new business ideas.
Michael is currently working with four Cotswold projects, two of which are investment-ready and have received funding offers. What they have in common, he says, is great management teams with driving ambition and the right combination of knowledge and skills in their market or industry sector.
So how does an entrepreneur go about securing investment for an idea?
"The first step is often deciding what the business will look like in say three to five years time," explains Michael. "If your vision is of a viable enterprise with an even greater future, then you already have the platform upon which to build your investment case."
The second step is preparing a business plan detailing the business idea, market opportunity and goals and of course the resources, including funding, that you need to help you achieve them. Working with an Investment Readiness Coach can help you prepare a document that meets investors' expectation and can often speed up the process.
It can take between six week and six months to get investment funding, depending upon your business stage and the time of year. First round funding takes longer than subsequent rounds and private investors tend to invest during the Spring and Autumn months.
Unlike the BBC programme 'Dragon's Den', the majority of Business Angels are not particularly scary and they can bring both industry knowledge and a network of contacts to a business as well as an injection of cash. But you'll still need to check out their CV and take up references with other entrepreneurs they have helped.
The British Business Angels Association website lists member organisations and the national Business Link website has a good introduction to equity finance and answers a number of key questions. Michael's company, Pilot Cottage, is also running a Cotswold based workshops covering this topic, such as Business Plans and Angels on 24th September in Painswick.
So what's in it for your business angel? Profit of course. Like all investors, business angels are looking for a return on their investment and with early stage businesses, this is achieved through the sale of the business at the end of their investment term. However, most angels invest for longer than they anticipate and the average exit is currently after seven years, rather than the three to five years that they had anticipated.
Michael adds: "The rule of thumb for angel investment is to 'double your money' in three years. However, not only do investments generally take longer to mature than expected, but the business plans that you presented to angels to seek their investment are often not the plan that entrepreneurs subsequently put into practice, especially during a period of recession."
Michael thinks that it's the smart or technology-based businesses which are more likely to attract investment over the next few years, together with those based in leisure, sports, medical and healthcare sectors.
He adds : "The creative arts are also beginning to attract investors' interest, including film makers, digital animators and e-publishers."
Other commentators feel that growing and selling food is also going to be popular, as well as selling 'affordable' luxury goods. Another growing area is selling goods and services to the over-50s, who still have disposable income available.
So could we all be entrepreneurs in these challenging times? Michael is not so sure.
"Entrepreneurs often have something special about them and it is these 'wow' factors and how they inject them into their business that makes their business special too."
Michael Howes can be contacted at : www.pilotcottage.co.uk