"Here's a quick review of items you should expect business investors to look into beyond their analysis of financial statements..."

Let's say you have spent a year seeking an investor to invest in your business venture; you spent considerable time pulling your business plan together, contacting potential investors, making management presentations, and now all you have to do is get past investor's due diligence.

*** What Exactly Should You Expect? ***

Skepticism.

Business investors want to be sure there are no skeletons in closet and that your venture is not next Madison Priest "black box technology".

Priest's famous black box was a revolutionary technology that claimed to allow ordinary phone lines to transmit data into people's homes at unprecedented rates - rates faster than fiber optics. By staging impressive demonstrations, Priest convinced private business investors and seasoned companies, such as Blockbuster and Intel, to invest money in his venture. In end, Priest's 'magic box' turned out to be nothing but a high-tech hoax.

*** Four Important Areas Business Investors Will Hone In On… ***

Finance, management, manufacturing, and marketing are four areas of concern to most business investors. Specifically, these concerns can be segmented as follows:

1) Finance

* Cash. Cash is king. It's lifeblood of all businesses - start-up or on-going businesses. Business investors know this. They will spend time understanding your cash flow assumptions and, if you're an existing business, they'll analyze your cash management practices. Poor cash management or shaky cash flow projections are immediate red flags.

* Profitability. Expect investors to compare your actual or projected gross margins from year to year. This provides a quick indicator of your historical or projected manufacturing efficiencies and pricing environment. It can also highlight potential control issues, excessive overhead, or under pricing strategies to capture market share.

* Bank problems. Out of compliance financial ratios, scrutiny from banks, or suspect bank relations - personal or business - are all red flags to business investors about how you manage your financial affairs.

* Outdated financials. The lack of monthly financial statements or detailed cash flow projections or, for an on-going business, statements that are not prepared on time are all indications of a loosely run operation or a lack of planning.

2) Management

* Continual crisis. Business investors watch closely for signs of weakness in you or your management team. Constant interruptions by emergency phone calls and demands for immediate decisions are signs of disorganization and lack of management.

* Substantial changes in key personal. Unusual turnover in key management positions can be viewed as a lack of leadership.

* No changes in senior management for many years. An established company with little or no changes in management team can indicate a stagnant business, not current in new methods or processes, or a very autocratic management style.

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When typical new business operator starts a business, they concentrate on making business succeed. That is necessary but not only thing that a business operator should concentrate on. A business depends on cash flow to exist and grow, so business operators would do their business a good turn by looking at sources of cash flow provided by Government.

We are talking about taxation authorities such as Inland Revenue Department in New Zealand (IRD), Australian Taxation Office in Australia (ATO) and Inland Revenue in United Kingdom and Inland Revenue Service in USA (IRS). All of these taxation administrations, along with those in Canada and South Africa for example, have both income tax and goods and services tax (GST) or value added tax (VAT) that present opportunities for refunds when a business’ expenses exceed its income in early stages of its life.

Initially, start-up capital may come from savings, family and friends and salaried employment. The last source of finance – salaried income – means that business operator still works full-time for a salary and part-time on their business. This presents particular opportunities to receive extra cash flow to fund growth of business – from value-added taxes and income tax refunds.

It should be noted that even where business owner does not have other salaried (tax paid) income, they might have a husband or wife who does have salaried income. If they become a partner in a partnership conducting business, or a shareholder in a Loss Attributing Qualifying Company (LAQC) in New Zealand only, then they can share in business losses and receive income tax refunds.