Harry Cobbold is Managing Director of UX and digital development agency, Unfold. Harry has lead numerous award-winning teams, delivering digital experiences which drive growth and bring businesses closer to their users.
So you’ve got some investor funding (or you think you might be in with a chance of getting some). And, rightfully, you’re wondering how exactly to maximise the positive impact of that funding on your business. The answer is (of course); it depends.
The way you spend your cash will differ depending on the size of your business and the position you’re in. If you’re a small business, which has just won its first round of seed funding, you’ll likely be spending that on product development or hires. This will help you figure out your product/market fit and get the foundations up and running.
As the business grows and you seek further rounds of investment, there will be a natural shift from a focus on product to a focus on growth. The cash you raise will be used to fuel the marketing and sales engine, reaching new customers to show off the product you’ve invested time refining to fit the market.
Whichever stage you’re in, it will be vital to budget and forecast your spending. Not only will your investors want to know how you’re going to spend your hard earned cash, but it helps you stick to a budget and spend things in the most optimal way. Here are four pieces of advice for maximising your investor funding:
Be frugal with your costs
It doesn’t matter how much money you’ve raised, you should always be laser-focused on cost. Don’t let the money go to your head. You wouldn’t believe how easy it is to spend £1m on a business if you’re not on top of your costs (flashy office anyone?). It’s vital to ensure every pound spent is going towards something which adds real value and growth-potential to the business.
The most successful companies are always very frugal with their costs. It’s simple: keep expenditure as low as possible. These businesses understand that this gives you more time to work with and allows you to compound your investment over time.
Become obsessed with metrics
Find out from investors what metrics they want you to reach. Understand what you need to prove in order to reach the next investment round. Become laser-focused on those metrics and cut out anything which doesn’t drive towards these.
If you’re finding it hard to pull the necessary levers to improve your product or service, we always recommend starting with your users. Invest some time and effort into identifying their needs. How can your product could cater to them better or operate more smoothly? Some of the tactics we use to gather data from users include a mixture of quantitative methods, such as Google Analytics data or A/B testing, and qualitative data such as 1-1 interviews and focus groups.
Usually a combination of these methods is best to build an accurate and detailed picture. Applying your findings for this will help you make more user-led decisions and take you a long way to improving your product and increasing conversions.
Optimise your revenue channels
Use your cash to open new channels or optimise your current ones. For example, if you haven’t started selling online yet, perhaps it’s time to look into doing this. Perhaps you’ve already perfected your online sales and are wanting to consider retail.
More likely, you will already know your main route to market but need to invest in optimising it. Remember, it’s almost always appropriate to optimise your current channels before branching out into new ones. So if you are already selling online, you may want to look at improving your user experience and in turn your conversion rate.
Evaluate your technology and examine whether there are any fundamental flaws which are holding you back from growth. For example, you could try to identify bottlenecks in your sales or booking funnel, improve your website’s load times, optimise your product pages or improve your website’s information architecture to make information easier to access.
We’d advise against investing too much in marketing/advertising until you’ve significantly optimised your sales funnel and there are no common barriers to conversion. The reason for this is that there isn’t much point in pushing traffic into a funnel which won’t convert them or has a difficult journey. It’s a complete waste of money if the clicks you’re paying for will drop off before becoming paying customers. Much better; optimise your channels first and you’ll get a far better ROI on your marketing and ad spend once you eventually do turn these on.
Invest in a great team
To do all of the above, it’s really important to have the right team around you. Whether that be mentors, financial or legal support, development or SEO. Do not be afraid to invest in these resources and outsource when you need to.
This includes hiring your own team of course. If you are a primarily digital business, you could opt to find a technical co-founder. They will help you overcome the early-stage technical woes that many budding businesses face. Alternatively, you could elect to work with an out-sourced team who will also have a wealth of experience on their side. Whilst these may sometimes seem like big upfront costs, they are most commonly the investments which pay dividends in the future.
We hope you found this article on maximising investor funding useful. If you are fortunate (and hard-working) enough to have attained funding already, and need some further advice on maximising your online sales, please don’t hesitate to get in touch.
About Unfold
Unfold is a UX design and development agency based in Bristol, United Kingdom. Unfold has a focus on e-commerce and ebook design and development, delivering high-converting platforms which propel businesses into their next phase of growth.
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