If you’ve been following my series of how to build a multi £million investor bank – This is the one that brings it all together in terms of the investor recognising your value over and above anyone else. To subscribe for all the valuable tips in one place – Click here: http://bit.ly/2LH1GPz
So what is Stress Testing?
Well it’s anything that can potentially go wrong in the project, that you need to account for and build a scenario around it. So it could be financing – the cost of the financing could go up, the project may go on longer than expected and you might run out of time with your existing lender. You might need to raise more money, you might need to look at a different market – so effectively you are de-risking this project as much as possible for your potential investor and for yourself as well.
Stress test many scenarios from changes in financing to delays on the project and the project management through to lack of sales or rental, demonstrate that you expect the unexpected.
Look at all the things that can be affected and then be effective in showing your investor you have looked at all scenarios and can show them the solutions.
It’s very powerful when you sit down with an investor and build out some scenarios to show them what could go wrong and then show them “here’s our solution or exit”.
If we were to over run for any reason – then this is the solution to the finance etc. All the way through to your sales and exits you want to have as much covered as possible.
I see a lot of people who don’t bring up what the investor doesn’t cover – but if you’ve done your stress testing, don’t be scared about bringing it up and bringing it to the table.
If you’ve done your work and you’ve looked into it – share it with them. It’s better that you do this before you enter into the project rather than in the middle when it could be….stressful!
This exercise above is a game changer for you and a truly worth while investment of your time. This level of focus on the detail will not only attract the investors to you over and above all the others but means that going into the project you are in for a much more enjoyable experience and your potential of success is much more now.. Extremely powerful for you on many levels.
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