Agreeing to invest in a business is relatively easy. Agreeing to accept an investment is not as easy as it involves giving away part of what many entrepreneurs feel is their baby.

The first thing I should say to entrepreneurs is that they should think long and hard about whether or not to accept going down the investment road. Control is a big issue for many of you. But recognise that 51% ownership is meaningless. I have a very simple view, the moment you accept just £1 of external money, you have a legal and moral obligation to run your business in the best interests of all shareholders. I will typically not invest in a company where the management team have more than 70% of a company. No specific reason for that number, but I have found in the past that the business ‘owner’ does not recognise that no matter how small another investor is - they have the same duty of care and attention to them as they do to themselves.

So this is a short post - but I hope an important one. If you accept external investment please remember this means

1) You cannot use the company as a personal bank account

2) Every penny spent has to be to further the interests of the business

3) You have to produce meaningful financial information on a regular basis

4) You have legal obligations to always act in the best interests of shareholders. Especially if someone offers to buy the business!

5) The shareholders have the right to ask you lots of questions and expect answers!

6) You need to have at least one non-executive director on the board and recognise what that means

Having said all of this, most businesses find that external investors can add real value to a business and help it grow rapidly.

Let me ask you, would you rather own 100% of a corner shop or 1% of Tesco?

If your answer is the corner shop - because you want control and the lifestyle - external investment is not for you!

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