Telling Your Company’s Financial Story

| December 23, 2013 | Technology & Innovation

Man Reviewing ExpensesWhat is your company’s story? What type of entrepreneur are you? What do your financials say about you and your company? For about 8 years, as a financial analyst for a Small Business Investment Company (SBIC), I sat in on hundreds of meetings, listening to entrepreneurs pitch their companies to the SBIC partners for a loan or investment. Soon, the partners and I began to characterize the entrepreneurs. We would enjoy the mad scientists seeking to get their innovative products to market, the sales guys who talked a mile a minute about the growth possibilities, owners simply going through a personal transition to retirement, divorce or merger, and even absentee owners. Almost every company had a financial snapshot that we could compare apples to apples. However, the partners quickly began to seek the story behind the financials that would give us reason to believe that one company might be less risky than another. Oddly, I discovered that some owners were less prepared to tell their company’s financial story than one would typically be for a job interview, even though they were asking for money.

There are no hard and fast rules for pitching your company, but perhaps I can motivate you to think more about getting your story across and your act together in a way that might increase your chances of inspiring a loan or investment.

Presentation and Success Stories

Although many owners approach the presentation to request a loan or equity investment as a sales presentation, keep in mind, your investors aren’t simply buying the product. Rather, although product is important, lenders and investors will highly prioritize assessing risk and opportunities for their return. As you craft your presentation, I encourage you to think about what your messaging says to them about risk and return. Once the financial pieces are in order, another value you have to offer any lender or investor is a positive partnership story for their fund or bank that they can market. Since the recession, I’ve noticed increasingly friendly outreach from banks like First Bank’s “When I was young I wanted to ___. Start and grow the business of your dreams today.” (, flash photo) On many websites, like Wells Fargo’s “Our Approach,” in the commercial lending section, you can read the bank’s marketing for your business. Although you need to choose your financial partners carefully, don’t lose the successful storyline for both you and them.  One CEO I know masterfully paused a somewhat technical renewal meeting, with underwriters present, to thank the bank for being a part of his company’s success story that year, in what was a somewhat uneasy year. In that moment, he gave them even more reason to continue to lend to this “success story” from both sides.

Grey Areas, Advice and Caveats

Don’t miss the following grey areas that investors/lenders analyze when considering a candidate:

  1. Is the company overly reliant on any one person? Does the owner want to retire or take a scaled back role? Is there a company without him/her?
    Caveat: Don’t play deity. It’s better to say “We’ve got a great team.”
  2. Is the owner believable and experienced?
    Caveat: Don’t ignore the hard times. Think of inspiring sport movies and be the company that made it through the tough time and is stronger for it.  Be specific, so that you can speak to their opportunity for return and possibly potential risks that are no longer an issue.
  3. Diverse customer base.
    Caveat: Solid customers are important. However, if you overly emphasize a single customer, it might seem like your company is dependent on one customer for its existence. Further, customer concentration can reduce the amount that can be borrowed against contracts.
  4. Is the company focused or disorganized and “all over the place”?
    Caveat:  If your presentation is not well prepared and you are too excited about the hundreds of random things going on in your company, investors can feel a bit drained trying to follow you and slap an easy “unfocused” label on your head.  Investors are uneasy with investing in success that happened by accident.
  5. Does the owner understand the financial aspects of the business or is he just a salesperson? Does he/she have “skin in the game” financially? Really look at your financials side by side for the past 5-10 years. Look for negative and positive trends and be able to explain what was really happening in your company at that time.
    Caveat: Don’t bow out of the entire finance function by saying “I’m not the accountant.” Don’t downplay personal investment you’ve made (your house, credit cards, bootstraps, etc.)
  6. Competitive advantages.
    Caveat: Don’t say, “We don’t have competitors” because it sounds naïve. Rather, describe the ways you compete or intend to compete in the future, if competitors step into the ring.
  7. Do they have a realistic forecast and/or budget?
    Caveat: You might feel uneasy handing over an entire forecast in your first meeting. However, a condensed snapshot and letting the investor know that you have thorough details and projections if discussions continue, will message to them that they will not have to waste huge amounts of time doing all of this for you.

Investors and lenders can only ask questions based on their own experience. Your presentation should provide answers to the investor about why they can feel good about risking their money with your company and how that will result in their investment return and a success story for your relationship. Those specific reasons to take a chance on money and partnership and the stories behind your companies are what make the finance world so interesting to me. Good luck!

Kira Spivak, founder of CFO Services, has been easing the minds of CEOs and their investors for 19 years. After gaining experience as the Manager of Equipment and Assets for Brannan Sand & Gravel Company and Director of Finance for Renewable Choice Energy, Kira founded CFO Services, LLC in 2007. Ms. Spivak is currently the CFO for Rocky Mountain Excavating and Concrete, Inc., where she has enjoyed the growth phases of transitioning from a small to mid-sized business through challenging economic times. In addition,CFO Services continues to provide financial solutions to corporate clients and investors in a variety of industries.

Ajeet Khurana
Ajeet Khurana
Ajeet Khurana wears many hats: author, angel investor, mentor, TEDx speaker, steering committee of the NASSCOM Start-Up Warehouse, Director of Founder Institute, Venture Partner with the seed initiative of a top Venture Capital firm, and former CEO of IIT Bombay’s business incubator, among others. Before all this, he was entrepreneurial twice in the field of education and web publishing. As a lecturer at the University of Texas at Austin, he taught e-commerce back in 1993, when the term "e-commerce" had not yet been coined. An undergrad in computer engineering from the University of Mumbai, and an MBA from the University of Texas, Ajeet is presently an active name in the startup ecosystem. From starting two ventures as a solopreneur, to helping a large number of startups with their go-to-market, he has never shied from getting his hands dirty. At the same time he has helped dozens of startups raise investment. He truly believes that small business owners are driving change in the world, and need to be facilitated as much as possible. Innumerable small businesses have gained from his attitude, vast professional networks, financial acumen and digital mindset.

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