Think of it like selling a house. Before buyers view the property, you tidy up, fix broken fittings, and make sure it looks its best. Preparing your business for investors works the same way. They want to see a company that is organised, clear, and built for growth.

Our Founder’s Investment Readiness Checklist will help you understand what investors look for in a business, and how to prepare for funding. Download here to edit and make your own notes.

1. Understand your funding options

Raising money is not just about finding someone willing to invest. Different types of funding bring different expectations. Some investors will want a share of your company, while others simply want their money back with interest. Understanding the main funding options helps you choose the right path for your small business.

• Venture Capital (VC): Venture capitalists invest in businesses that they believe can grow very quickly. In return, they take a share of your company. They will usually want some control and influence over how you run the business.

• Private Equity (PE): Similar to VC but usually for larger and more established companies. They invest big sums, but they will expect strong evidence that the business can grow further.

• Debt or Loans: This is borrowed money that must be repaid with interest. Unlike VC or PE, you do not give up ownership, but you do need to prove that you can make repayments.

• Angels and Family Offices: These are wealthy individuals or small groups who invest their own money. They may take a smaller share and can sometimes bring helpful contacts and experience.

The right choice depends on how quickly you want to grow, how much control you want to keep, and how much money you need.

2. Get your house in order

Investors will carry out due diligence before committing to funding. They want to know your business is well managed and financially sound. Preparing your business for investors means making sure the basics are clear and professional.

• Are your accounts up to date? This means your bookkeeping should be accurate, showing clearly what money comes in and what goes out.

• Are your bank statements available and complete? Investors will want to see a full record of how you manage your money.

• Do you have proper employment contracts for your team? Informal arrangements may work when you start, but investors will want to see everything in writing.

These are the foundations of investment readiness. Without them, it will be difficult to secure business investment.

3. Make your finances tell a story

Your numbers are not just records for compliance. They should explain your journey so far and give investors confidence in your future growth. Investors will want to see clean tax records and financial statements that show the opportunity ahead.

• Your filings with Companies House should be correct and up to date, showing who owns the business and its official records.
•  Your tax records with HMRC, including VAT, PAYE, and any R&D tax credits, must be in order. Missing or late filings raise red flags.
• Your financial statements should tell the story of your journey: how you started, how you make money, and where you are heading.

Think of your accounts as a storybook that explains your past performance and gives confidence about your future.

4. Keep banking straightforward and professional

Mixing personal and business finances is one of the most common mistakes founders make. If your accounts are unclear, investors may walk away. Being investment ready means running your company in a transparent and professional way. To avoid this:

• Make sure you are using the correct bank account in your company’s name.
• Keep personal and company money separate.
•  Be ready to share all business bank statements with potential investors.
  

This shows that your company is a professional organisation, not just an extension of your personal bank account.

5. Show a clear approach to employee pay and contracts

The way you pay yourself and your staff matters to investors because it affects both costs and culture. They will want to know:

• Do you pay yourself through salary (PAYE) or throughdividends? Each approach has tax consequences, and investors will want to seethat you are paying yourself in a fair and sustainable way.
• Do your employment contracts include details of pay, bonuses, and any share options? Clarity prevents future disputes.
• Do your contracts protect the business with non-compete and confidentiality clauses? This makes sure staff cannot take your ideas orclients if they leave.

This gives investors confidence that your team is well looked after and your business is protected.

‍6. Know your equity position

Equity is just a fancy word for ownership. If you have already raised money, you may have given away a percentage of your company in exchange. Before raising more investment, you should be able to explain:

• Who currently owns what percentage of the business.
• How a new investment will change those percentages.
  

This is usually shown in a “cap table” (short for capitalisation table). It is like a family tree of ownership. Investors want to see it clearly, with no surprises.

‍7. Present a strong vision for the future

Investors want to believe in your future as much as your past. You should be able to show:

• A five year forecast with realistic sales, costs, and profit expectations. It does not need to be perfect, but it must be credible.
• A clear explanation of how you will use the investment.Will it go into hiring staff, developing new products, or entering new markets?
• A sensible and defendable valuation. This is the price you place on your business. Too high and you risk scaring investors away, too low and you give away more ownership than you need to.

This is your chance to show your vision, ambition, and leadership. Investors want to believe in your vision and know you have a road map to achieve it.

Final Thoughts

Mark Twain once said, “the secret of getting ahead is getting started”. Preparing for investment can feel like a big job, but it will pay off in the long run. The more prepared you are, the stronger your chances of securing funding on terms that work for you. More importantly, the process gives you clarity and confidence about where your business is going.