The ideal growth strategy is usually dictated by the ambition of the entrepreneur. The type of business and the target market could also be a factor in deciding on the ideal growth strategy. However, growth can be measured in many different ways: size, revenue, locations, profitability, employees etc.
What would you say is your ideal strategy for growth from the following?
- Focusing on one Location
- Growing corporate owned locations
- Growing through franchising
- Growing through acquisitions
- IPO (initial public offering)
If part of your investment proposals ideal strategy for growth is by
- Focusing on one location
- Growing corporate owned locations
- Grow through acquisitions
- or via IPO
Then this may require some additional thought on your part.
However if you are thinking of growing your company through franchising then this is an approach, and something an angel investor will look upon as viable. However, you will have to convince an angel investor that your investment proposal definitely has the potential to reach a proof of concept stage. Do bear in mind before pitching this idea for growth to an angel investor, upfront development costs will need to be factored into your initial funding requirements.
Once you have a proven concept that is likely to work in various markets and your cash outlay and management costs are less than corporate owned locations (e.g. having several locations vs a single location), your project will seem much more interesting to an angel investor.
You may have a more unique way of proposing growth for your company but five of the most likely strategies for growth are listed above. Each of the strategy options has its merits but they are not without challenges or restrictions. Franchising is very appealing because it is the one that can provide accelerated growth. Franchising will also appeal to angel investor because it allows you to sell your proven concept to other markets.
With a successful business model, the company receives franchise and royalty fees and can grow much faster without the burden of having to finance growth through corporate owned locations. Once you have proof of concept and at least one year of results and success in a particular market, this deserves serious consideration.
There are consultants available to help package and launch your concept so don’t be intimidated by the process.