In this blog, Melanie Mills from Big Society Capital looks at the one thing you really can’t run your enterprise or charity without. Read on to find out how to protect your most valuable commodity.
What's the one thing you really can't run your charity or social enterprise without? Here’s a clue: you can’t get it back or replace it.
That’s right, time.
Taking on social investment requires a lot of time, so being able to manage and protect yours is essential. When you've only got so many hours in a day, how can you ensure you achieve your priorities whilst also receiving social investment?
Don’t leave it until you really ‘need’ the money! Social investment doesn’t work best when it is a bailout or emergency solution.
We've now heard from over 50 Hear from a Peer speakers. If there's one final lesson to learn from all we've heard, it's that social investment doesn't happen overnight!
Here's how to protect that ever precious and valuable commodity…
Firstly, understand the hoops you need to jump through. Social investors have processes in place that take time - from reviews to -committees who have the decision making power. These ensure that the investor has all the information they need to make an informed, balanced and proportionate decision. A social investor won’t lend you money if they don’t think you can afford to repay. The very last thing they want to do is to damage your ability to create impact.
Their ability to keep to this schedule is entirely dependent on you providing the information they need. Liken it to a contract submission: you wouldn’t send it before the deadline if you were waiting on vital pieces of information. Investment Managers are usually very experienced. So they can expect the questions any credit committee will ask. Use their experience to give them and you the best chance at getting a yes.
1) Be on the same page as your social investor
When engaging with an investor, ask exactly what their time frames and processes are. This way you’ll both be on the same page, time scales and deadlines.
Do you have a critical date you really need the money for? Is there a cash flow a contract that will start on an exact date? Do you need to buy an asset at set auction date? If there is a critical time-frame on the horizon, make sure your investor knows. By doing so, they can work with you towards that date.
Understand that not all investors are the same. Some investors have monthly credit committees and others are every week. Their internal processes again will impact on their ability to respond.
What we do know though is that investors will often talk through the model or standard process. It’s advisable to ask what the average time is rather than the fastest time.
A great quote from an investee I always remember is ‘an early no is so much better than a lengthy one’. So if you aren’t sure where you stand with an investor, feel empowered to ask.
2) Be prepared for social investment
You will have to carve out time and resources to prepare up to date numbers and business plans. And this is all on top of the day job! We know it’s a challenge, so if it’s possible consider:
- Scheduling out some time every day to focus on getting the deal done
- Bring in some extra support or resource. Back-fill your time or another member of your team’s time. Don’t get an external person to do the work – you need to know and own the numbers!
- Get a mentor or contact somebody who’s been there. Their advice and insight can help provide an independent perspective.
3) Keep in touch with your investor
Time can get away from us all, so be in regular contact with your investor. Is everything on track? Are they waiting on something from you? When will it be going to the investment committee for consideration? When will they have a decision?
Importantly, do you have other options? Have you thought through what the consequences are if the decision is not the one you wanted?
Time truly is your most valuable asset, so following the order of Good Finance's 7 lessons in social investment, our last piece of advice is to: Remove any ideas that social investment is a replacement to grant money, understand why social impact matters and start recording it early, research the different social investors and think about the relationship you want and expect, make connections and start having honest conversations with social investors early, find out how much different investors charge, then prepare for the due diligence process.
Director of Social Sector Engagement, Big Society Capital.
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