Create Your Financial Story Before Raising Capital - The Journey of Vivian Riley
Updated: Aug 18, 2021
(Equity Crowdfunding Series)
Do you know where your business is going in a few years? Answering this question is crucial in equity crowdfunding. It’s not enough to know the past story (bookkeeping) and comply to pay your taxes every year. Financial forecasts are vital to show your investors that your vision is profitable and sustainable. Here's the tricky part: it's dynamic. You need to consistently update your numbers and adapt to an ever-changing business environment.
In this episode, Vivian Riley talks about her preparations before raising capital with equity crowdfunding. She notes that having solid financial records, a forward-looking view, and marketing strategies helped her build her network of investors. We now have more opportunities and options when raising funds, and it’s important that we’re prepared every step of the way.
If you want to be ready to raise funds for your business, this episode is for you!
Here are three reasons why you should listen to the full episode:
Learn the benefits of hybrid financing that includes equity crowdfunding.
Discover how historical data, financial forecasts, and consistent reviews can help you prepare to raise capital.
Understand why investors need to be confident in both you and the business.
Visit Christina Sjahli’s website for more insights on raising capital through equity crowdfunding on the Her CEO Journey podcast.
Her CEO Journey Equity Crowdfunding Series:
Creating Successful Marketing Campaign to Raise Capital - The Journey of Trieste Reading
Raising Capital with FrontFundr: Due Diligence and Managing Finances - The Journey of Jaime McNally
Making Your Way Through the Legal Side of Raising Capital - The Journey of Julie Bogle
Download this Action Guide to help you create your financial story before raising capital.
[07:09] Vivian’s Experience and Business
Vivian started as an accountant. She and her husband developed Renovation Find to provide solutions for the homeowner-contractor problem.
Vivian shares that it was common to hear homeowners getting ripped off by contractors. At that time, there was no way to verify companies except through review-based platforms.
However, review-based platforms were unreliable since they are not validated. It can negatively impact both homeowners and contractors.
Renovation Find's solution is a certification program and background checks. This ensures that companies and contractors are reliable.
Listen to the episode to know more about Renovation Find!
[14:47] Building Your Recurring Revenue
Vivian shares that their annual recurring revenue comes from contractors. Once contractors get approved, they get to choose a marketing package that suits them.
In building this recurring revenue, you need to know who your customers are and what you monetize.
Once you identify your customers, learn how to scale the business. Where can you find more customers?
Be strategic about your growth. One of your most significant investments will definitely be marketing.
[18:28] Hybrid Business Financing and Equity Crowdfunding
Vivian shares she first started with friends and family. Eventually, she turned to BDC Canada.
She prefers hybrid financing. She doesn't have to pay her BDC loan until the end of the term.
Throughout the loan term, you're paying only the interest from a cash flow perspective for the business.
Due to solid marketing and building trust with clients, the company now has a network suitable for equity crowdfunding.
Frontfundr allows raising funds outside the platform. Listen to Vivian's full explanation in the episode!
“The beauty of being on FrontFundr is they allow us to raise outside of the platform.”
[24:00] What to Do Before Raising Capital
Raising capital can be essential to scale and grow a business.
You need to dedicate time to set up your campaign correctly. Two crucial steps are strategizing your marketing plan and executing it.
You also need to have excellent financial forecasts. Vivian shares that she works backwards and uses historical data to determine how much capital is needed for growth.
It is also crucial to consider what-if scenarios in your financial forecasts.
“Before you decide to go into equity crowdfunding, or any capital raising, I would say dedicate more time on your financial forecasting.”
[28:47] How to Build Reasonable Financial Forecasts
When you're raising capital, you need to know your numbers to plan accurately.
Creating a financial forecast isn’t enough unless you maintain and update your numbers.
“In addition to building the forecast, you also have to make sure you're maintaining the forecast or else you defeat the purpose of actually doing the forecast in the first place.”
In the beginning, making financial forecasts may be difficult due to a lack of data. You will need to research and make a lot of assumptions.
Remember, you need to show numbers to your investors. Otherwise, they won't be confident about investing in your business.
[31:19] Key Steps to Investor Relationships
Vivian shares that it's crucial to keep transparency and communications, especially during the pandemic.
Be transparent with your current and potential investors. Build trust and confidence.
Even if it's not during a pandemic, you need to be transparent with your investors.
“Being transparent with them is the key with anything. So I think not just transparent with your current investors, it's just being transparent with even your potential investors, and being transparent with our staff, because it creates a lot of trust and confidence.”
[33:13] Helpful Tools for Business Finance
Don’t do your accounting manually. Save yourself time, and use accounting software.
It is also essential to have a cash flow projection program.
In whatever stage you are, keep an eye on your cash at all times.
Have a process in place and keep these numbers updated.
When you have these numbers ready at all times, you can adjust when necessary.
[39:33] Team Dynamics and Management in Times of Crisis
When the pandemic hit, Vivian assessed and adapted to her financial situation, which allowed her to keep all her staff.
By April, the company was able to take different strategies and continue growing sales.
“We actually experienced growth in a pandemic year. And we really wouldn't have been able to do that without our team being there with us. And it was all hands on deck like I said in my video. And everybody stepped up to the plate. And it was like, whatever we had to do to comfort our contractors, to help out contractors, or to help homeowners, whatever it was, everybody was doing what they needed to do.”
Expect and be prepared for recessions.
The strength of your company will also depend on team dynamics and partnerships. Make sure that your skills complement others and vice versa.
[47:42] Vivan’s Advice on When and How to Raise Capital
Assess your business needs and vision.
Master your business pitch and your pitch. Investors invest in both you and the business.
Know your financing options. There are more ways than what's traditional.
Learn the different types of investors that will suit where you are in your business.
Listen to the full episode to hear Vivian's advice in-depth.
[49:57] Benefits of Creating Early Momentum and Strong Financials in Equity Crowdfunding
You can start equity crowdfunding when you have already built a strong network of potential investors.
It's all about momentum. The more you show your progress on the campaign page, the more urgency you're creating.
Use your marketing strategy to your advantage. Show your progress to give people confidence in you.
Make sure your financials are in order because people will ask for them.
“Just have to learn to deal with the uncertainties and the challenges that are thrown at you and be as optimistic as possible. So there was a lot of personal and professional growth with that, that leap of faith that I took.”
“We really wanted to focus on building a sustainable business, and focus on that over the technology...So we've been quite strategic with our raise and raising at different points of time.”
“What's the goal? Eventually, the vision of our company is to be a nationwide company. The goal of this raise is to get us to kind of a next milestone to hit about the $2 million in revenue, and in preparation to go into a Series A round funding.”
“My time is divided into so many different areas. And I'm sure many entrepreneurs can relate and attest to the fact that they are spread very thin, and they wear different hats.”
Vivian Riley is the Chief Operating Officer of RenovationFind Inc., a unique online directory for helping homeowners find trustworthy companies and contractors for their home renovations and improvements. By working closely with third-party organizations, the company can pre-screen and monitor the business listed on their website for financial and legal issues. Also, their certification program adds a level of trust to homeowners.
Before RenovationFind, Vivian worked as a financial analyst and specialist in various companies like Stantec, CBC Radio, and Ormed Information Systems Ltd. She is a Certified Public Accountant.
Interested in Vivian’s work? Check out RenovationFind. You can also check their blog for information on home renovation tips and their crowdfunding on FrontFundr. You can also reach out to Vivian on LinkedIn and email.
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As a mission-driven female entrepreneur, raising capital can be challenging. It’s not enough to know the past story (bookkeeping) and comply to pay your taxes every year. Financial forecasts are vital to show your investors that your vision is profitable and sustainable. If you enjoyed today's episode of Her CEO Journey Podcast, then hit subscribe and share it!
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