Darryl Bannon of Darryl Bannon Consulting brings her holistic understanding of how businesses work and grow to the Amaiz Podcast. If you’ve reached the stage where you’re thinking of ways to grow and scale your business, this is an unmissable chat. Daryll takes us through the types of available investment and the crucial things every business owner needs to consider. What is impact investment? What’s more important, your numbers or your idea? Just how important is a business plan? Listen to our latest investment chat.
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The Amaiz Podcast: Darryl Bannon talks Investment
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Jake Shaw, Darryl Bannon
SUMMARY: Darryl talks about how to pitch for investment and what sort of investment/debt/loan is available.
Jake Shaw 00:01
Hello, and welcome to the Amaiz podcast where we talk to businesses large and small experts in subjects across a spectrum of business, entrepreneurial ism tech, innovation, investment and finance. I'm Jake Shaw, your host. If you'd like to learn more about Amaiz, please go to www.amaiz.com.
Jake Shaw 00:23
So today I'm joined by Darryl Bannon. Darryl is an investment specialist with a deep understanding how businesses work, and how businesses grown. Hello.
Darryl Bannon 00:33
Hello, Jake, how are you?
Jake Shaw 00:34
I'm very well, thank you very much. So today, I wanted to talk to you a bit about investment and how it works. The first question I'm gonna ask what is investment?
Darryl Bannon 00:43
investment is anything that gives you equity into your business And it's not a loan. It's not as simple as someone saying, Well, here's 100 grand, I want 10% of your business, there is a lot more mechanics ago in the background, there's a lot more risks you have to think about, there's the human dynamic of a new person getting involved in your business, etc. So does that mean you're giving away parts of your business to somebody for money? Exactly where the difference where you go for data is that you still retain ownership 100% of your business, but you've leveraged your business towards debt, police, you have 100% control of your business.
Jake Shaw 01:14
you've touched on that there are different ways that investment can happen, what kind of investment is available? Let's say you're, you're an already operating SME, and you're turning over decent money, why should you be looking for investment.
Darryl Bannon 01:28
So you might have a nice business, if decent have turnover. Now again, it might be that you're more suitable for grants, it might be that again, you're looking at a more hybrid mix of some bank debt, easier overdraft getting some self funding, an investor gave you 100 200,000 pounds, they want to be getting at least eight to 10% out of that initial investment. And if your margins are still quite tight, you're not gonna be very attractive to an external investor.
Jake Shaw 01:51
You're dealing with people who are very serious about this business and won't be your friends.
Darryl Bannon 01:56
Think back historically, look at the case studies of Facebook and all those companies, it was venture capitalists who came knocking on the door, rather, you get the big millions of pounds of investment to really catapult the business.
Jake Shaw 02:07
There is one particular outfit that specialises in doing impact investment, I didn't understand before I had this conversation what impact investment was, but it's actually becoming a very, very important proposition, though, isn't it?
Darryl Bannon 02:19
So whether it's green energy, whether sustainable fashion, better health outcomes for people in different countries, and if you feel that your product or service is very much more in that more kind of tertiary sector and that I mean, the third space, which is social enterprise, the environment, health care in the non-pharmaceutical means you need to be looking at more specialised groups. For them, the return on investment is feeling that they've made a change to the world, if it ends up that they get three or 4% return or a small dividend, they're quite happy to take that. I think when you start the investment journey, it's very important to be very clear in your own mind, who you want to work with, and the types of investors you want to speak to.
Jake Shaw 02:55
Let's assume I want to start my investment journey. I've got my business, I think I can grow it, will I speak to you first.
Darryl Bannon 03:02
There's a few different people he needs to meet first of all, and be very clear on what you want to get out of that money. How much money do you actually need? There's lots of questions you need to be very clear on, then you will come to people like myself, who will look at your financial modelling and make sure that fits in with your business plan. I want to see a real reason for the cost. Don't just say, Oh, this other business spent X amount on something that's great for them. How about your business? What do you actually need to grow as I've worked with them on that. And because I have an MBA and marketing degrees and all this kind of stuff, I'm not as an accountant, I can look more holistically. And I could kind of challenge costs as they will actually in the last two, three years marketing, for example, as costs have come down quite a lot, because influencer marketing involves the use of social media. And once you know what it is you need for the business, then you're in a better position then to go out to investors. And also from a valuation point of view, if you're already existing company that's trading is far easier to value. If you're starting from scratch, it's very hard to place a fair valuation on your business.
Jake Shaw 03:56
Let me ask this question. What's more important? Is it the numbers? Or is it the idea, the idea and the people the money it can work on? Everyone else? Everyone overestimates their sales. That's just the way life is. But ultimately, the investor will look at you as a person and go come and work with them. Do they seem like they're going to put their head down actually work? Then they'll also look at the idea itself. They may say actually love the concept, but I have some ideas have you thought about this.
Jake Shaw 04:21
So you will have seen quite a number of pitches.
Darryl Bannon 04:25
And if you start waffling about the technicalities of take the example of maybe shampoo, if you don't have all the wonderful ingredients in your shampoo, people just going to get bored if you're not going to get a skin rash, and your hair is not greasy at the end of it. And you can project that as sales, fantastic. Go forth and multiply, especially if you're going live at a pitching event. Never answer a question that you weren't asked. So someone asks you, what are your plans for next May don't start answering about something completely irrelevant and different. Just because you want to get that point across. Keep it simple, you know, don't just rush to give information. You weren't asked for Just focus on what you're good at. But don't tell him about all the things you're not good at. Because that doesn't really help. The conversation is so different. When you go for a job interview, I've interviewed 1000s of people over the years, I don't want to have to interview 50 people, I want the first person to walk into the room to be a good interview, and I can go oh thank god, hire them brilliant come on into the team. So you can remember one investor is going to as invited you to a meeting or to pitch live, they've already liked something in your deck, they've already got a positive impression of you to build on that positive impression don't take away from by coming in being all nervous and trying to be too humble either. So definitely not, I'm rubbish at marketing. Don't say that. Just say my strengths are in this, this and this, don't highlight your weaknesses that will come over time of investors that will actually have a great track record in marketing. You go, oh, that'd be fantastic. It's not my strongest suit. But it'd be great to have someone who can guide me and mentor me and actually make me better at marketing, you can twist the question and still come away looking quite positive. But I will say as a business person, you should be naturally good at marketing Anyway, you just haven't found the tools to do the job. So things like learning how to positioning strategies. I work a lot with fashion brands. And the first thing is, oh, women 25 to 35. I'm like, well, that's great. So who's actually your customer? And they kind of get all flustered? Who is she? What does she read? What does she write what she watched on TV, what's her political leanings? These are all the things you need to know. Because when you craft that advert or your craft, who your you know, your marketing strategy, all those threads have to filter through. But these are things you can learn
Jake Shaw 06:26
How important is a business plan if you're looking for investment, and I guess when we're talking about business plan, we're usually talking about a growth plan for an existing business or an actual straight blue sky business plan for a pre-launch, or to launch a new venture. So how important is that document,
Darryl Bannon 06:43
it is important. And also people forget, it's actually a really good tool for you as an individual or as a team, as well as a structure to go by, no one wants to read 150 page essay into how your brand is going to grow. There are so many good templates out there as one of my website, whereby, you know, you just want to fill in certain categories and keep it to bullet points, you've got to remember, play to your strengths. So bullet points are perfectly acceptable, and really what you're trying to set as what the targets and objectives are for your business. So you may say that in year one you want to sell in the UK, moving to France, Germany and Spain. Fantastic. year two, you want to do X Y Zed. So how are you going to do that. And so the next layer in your business plan is okay, now I'm going to, I'm going to start off in the UK, then I'm going to move to France. So what you need to think about if you're moving to France, you're going to have to convert your website, you have to translation services, your postage is going to change, just to think about all the factors that are going to change based on those different locations, you don't have to write a huge essay on that you need to demonstrate your thought about these things logically. So usually, a good business plan will start off the basic information with the company where you're registered, who's on the team, then you'll go into the sales strategy. So how you can actually go route to market that kind of covers with your marketing strategy, a positioning map, so where do you fit in the marketplace compared to your competitors on quality and price to usual, that mix model is going to be more prevalent. So an investor will, you know, in the past expect to see an office spam, but actually, now they've realised you don't need an office per se, if it's a private equity or venture capital firm, they might give you a desk once a week or twice a week to hold meetings and for example, so that your team can still work remotely, but you have a hub or a base to go to. So think about those sort of things as well. And then ultimately, depending on your business type, you may have an exit strategy. So far more common in your bigger kind of tech companies where you will have some will say, well, in year 10, My plan is to sell eight, it doesn't mean because you've written a business plan that's 100% the way it's going to go. But this is good for an investor to appreciate where your mind is going.
Jake Shaw 08:35
That's fabulous advice.
Darryl Bannon 08:37
It's not just for external people. It's also good document for you to have internally as well.
Jake Shaw 08:42
So living and breathing document, you should keep live anyway.
Darryl Bannon 08:45
Exactly, exactly. As well as things where I think people get daunted thinking they have to spend three days in a dark room writing this, just spend an hour a day on us, or even an hour a week. whatever fits your lifestyle. If you're watching TV in the evenings, you can have the laptop on your lap. And it could be just putting in some points. You know, there's no reason why you can't be tinkering with it all the time.
Jake Shaw 09:04
Darryl, where do people find you if they need your help?
Darryl Bannon 09:07
So my website is www.Darrylbannon.com. That's D.A.R.R.Y.L B.A.N.N.O.N. I'm also on Linkedin connect with me there as well.
Jake Shaw 09:17
Darryl Bannon, thank you so much.
Darryl Bannon 09:19
You're welcome. Thank you very much.
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