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Creating an investment teaser for your company each 12 months could appear premature if sales aren’t already on the radar. However, this essential future-oriented exercise does much greater than prepare your company for a possible investment or sale. It helps business owners visualize the presentation they would wish to make to achieve the business valuation of their dreams. The difference between what you would like to say and what you’ll be able to credibly say is exactly where it is best to focus your next hectic period of energy and investment.
My partner and I learned this the hard way. We sold two consulting firms about ten years apart. The first was a strategic buyer in the lower end of the money flow multiple range, and the second was a private equity buyer in the higher end of the revenue multiple range. Yes, the market conditions were a little higher the second time around. But the real difference was that we began focusing on how to maximize our exit multiple on day one. We were continually running a sell sheet in our heads and continually rehashing investments that didn’t pass the “smell test” of the sell sheet.
To get began on your first business teaser, get into the right mindset. Remember, you’re writing a forward-looking elevator pitch for your company that’s designed to get an investment or strategic buyer to swallow your piece. Imagine yourself storming into the tenth VC conference room of the day and pitching the perfect story to a rapt audience. This should include a stack full of knowledge and trend evaluation with recent financial results that clearly show that your business thesis is spot on.
Total addressable market
Every good presentation starts with a discussion of the total addressable market (TAM). You want to give you the option to show that the team has chosen the fastest growing a part of the addressable market in a highly disciplined way. You should gain plenty of knowledge during the go-to-market phase to fine-tune that market and make the case for which products and services deserve the highest levels of investment. If you do not have this information at your fingertips, this is the place to start.
In our first business, investors yawned when discussing TAM. We only had two public company entry points where our expensive consulting services could possibly be purchased. Worse still, the variety of public firms slowly declined. Not a very growing industry, though we grew revenues by over 30% annually for several years. In Business #2, we have enhanced our service offering to support the growth of our TAM from two to eight, almost tripling our TAM to $1 billion.
Development strategy
The next part needs to be about your growth strategy. List and prioritize your company’s most vital growth levers. Think about two or three ideas that can really get buyers to nod, not 12 weak singles. If your list is long and still looks like throwing darts at a wall, start narrowing it down. This is crucial because you are going to be jumping around the fences by directing just about all of your invaluable business investments there.
In our first business, we focused on a land and expansion strategy. We made significant investments in outside salespeople, custom marketing tools, and company-sponsored networking events. It worked. We attracted several large clients that became the foundation of a referral network that also feeds us. The downside? It made scaling expensive, and initial sales meetings became our entire existence.
Business #2 had a much lower acquisition cost, which investors really liked. We had cracked the code on using thought leadership to open doors for prospects and were continually refining what they were probably to read (actual instructions, not deep strategic considering) to continually improve our probabilities. Most of our marketing dollars went into internet marketing to drive more attention to our thought leadership. Margins were higher and we were getting more leads than simply cold sales leads.
Financial model
The final, and probably most vital, a part of the sell sheet is the financial model. The model must show the key metrics that translate great ideas into profits. Before you begin running your business using the best metric on your operations team, gather industry intelligence on the industry metrics that are most vital today. Don’t try to do this in a vacuum. Reach out to the newest vendors in your industry to ask them about their most vital financial decision. Find out what prices many firms are selling at and what metrics are driving their actual selling price. If these metrics aren’t telling your story, it’s possible you’ll need to make real changes to your capital expenditures, operating expenses, or pricing model.
Business #2 had very low overhead because we spent less on office space and geographic expansion and more on automation tools. It helped that this was happening during the pandemic, and our public company clients were more understanding of the lack of a flashy corporate headquarters. Expenses were lower, and excess money was spent on a very surgical marketing campaign. We maximized money flow and margins, and as a result, we greater than doubled the sum of money we pocketed from sales over two years.
It could also be years before you sell your business, but the discipline of writing your own investment teaser every 12 months might be an essential factor in making successful investment decisions. Imagine standing in front of experienced investors, demonstrating how your business strategy and focused investments provide unparalleled growth opportunities. By prioritizing clear, compelling growth strategies and directly aligning your investments with them, you position your business not only as a competitor, but as a compelling opportunity.