Recruitment finance provider, Sonovate, recently secured £20 million in capital investment. The company’s co-CEO Richard Prime shares the lessons he learned on his growth journey

In order to grow a successful business, you’ll need a number of things: differentiation, discipline, and a thorough understanding of your target market, just to name a few. But to really level the playing field for your business to become an industry leader, you’ll need sizeable funding – and there are many different options to choose from.

However, securing funding is just a start, and it won’t be worth much if it’s not managed correctly. Understanding how to make the most of your cash injection is something you need to lock down before receiving it. Get it wrong and you could slow your business growth and shut the door on future investments. Get it right and you’ll be on an upward trajectory. It’s hard work, but it’s not impossible.

My company, Sonovate, recently secured £20 million in capital investment, £5 million of which came as part of a Series A funding round – but it couldn’t have been done without a comprehensive understanding of how that funding should be used and, furthermore, how to manage relationships with key investors. Here are some of the important things I discovered along the way:

Know your business

Investors will want to see their funding put to work against the plan they bought into. Be careful not to spend the investment on other projects that have no bearing on the goals you’ve committed to achieving. There will undoubtedly be times of uncertainty – times when you’ll need to adapt your business model – just make sure you have the full backing of your investors when making these key decisions.

It’s easy to get swamped by immediate growth targets and deliverables, but you need to stay focused on your endgame. For many ‘bigger picture’ thinkers at the helm of a growing business, unit economics and metrics can be distracting, but they are vital to the ultimate success of creating an established business. You need to understand the direct revenues and costs associated with your model, and accurately forecast how customer acquisition will affect them.

Equally important is understanding the long-term impact of your brand equity, share price (if relevant) and operating costs such as office software on your business growth potential. Your investors will expect nothing less than the most detailed understanding of how your business must operate in order to sustain profitability.

Communicate with investors

Say what you’re going to do, do it, and then tell your investors you’ve done it. It goes without saying that communication is key to building good relationships with your investors. When milestones have been achieved, share them. Your investors will want to hear good news: after all, securing future funding is dependent on continued growth following on from the initial investment.

Remember that the investors you’ve chosen have also chosen you. They believe in your business and can help you navigate a tricky situation or important decision, so include them as much as you need to. At the end of the day, if the numbers are looking good, your investors will be happy. It’s as simple as that.

Secure future funding

Ideally, you want your investors to stick with you and build on their initial investment. Don’t rely on this eventuality though – if you’ve successfully closed a Series A funding round, for example, make sure to develop a Series B funding strategy that includes other investors too. You’ll want to stay in close contact with the funds you believe are best-suited to support your company’s vision – whether they are already on board or not.

To secure the next round of investment, show investors the growth your business has achieved with their funding and take them through your plan for the next stage. You’ll need to demonstrate that your success to date is not random, but built on clear metrics that are key to growing your business and supporting future growth. Again, if the numbers are positive and your proposal is solid, investors will be interested.

Securing funding is a busy and tough time for all founders as they juggle the many needs of their fledgling business while ensuring investors stay smiling. There’s a lot to learn and a lot more to prove in this phase, but once you’ve done it, your business will be one step closer to becoming an industry leader.

Richard Prime is co-CEO of Sonovate.