How to Sustainably Improve Profit Margin at Your Software Development Agency
Improving your margin is an exercise in balancing costs against the tactics you are using to generate revenue while continually working to make your team more efficient.
There might not be any slide more important than the "use of funds" slide in your pitch deck. This crucial slide does more than just outline where the money will go; it paints a picture of how each dollar will strategically drive your startup's growth and success.
For potential investors, it’s a window into your planning and financial acumen, showcasing your understanding of resource allocation and your strategic vision for the future.
Creating a winning use of funds slide demands a balance of clarity, detail and foresight, ensuring that investors can see the direct correlation between their funding and your startup’s trajectory.
A use of funds slide details how the capital raised will be utilized. It’s a clear, concise breakdown of the different areas where the investment will be allocated, such as product development, marketing, hiring, operations or research and development.
This slide is more than just a financial plan. It’s a strategic tool that communicates to potential investors how their funds will directly contribute to the growth and scaling of the business.
For investors, the use of funds slide is a critical factor in their decision-making process. It demonstrates the startup’s strategic planning skills and its understanding of what it takes to grow the business.
Investors use this slide to gauge:
An effective use of funds is more than a simple list of expenses. It weaves a narrative that aligns your financial planning with the long-term objectives of your startup.
The use of funds slide must be clear and precise. Avoid vague categories and generalizations. Instead, provide specific, itemized breakdowns of how the funds will be allocated.
This might include detailed percentages or figures for areas like product development, marketing, staff salaries or operational costs. The aim is to give investors a transparent and detailed view of your spending strategy, ensuring they understand exactly how their capital will be utilized to drive growth.
Every dollar outlined in your use of funds slide should clearly contribute to your overarching business goals.
Whether it's expanding your team to accelerate product development or allocating funds for market research, it's important to show how each expenditure is a strategic step towards achieving your business objectives. This alignment reassures investors that their funds will be used to directly support the growth and scalability of your startup.
Support your financial projections and allocations with evidence. This could include market research, pilot studies or historical financial data from your business.
Demonstrating a data-driven approach in your financial planning adds credibility to your use of funds slide. It shows investors that your allocations are not just theoretical but are based on solid research and realistic projections of your business’s growth trajectory.
We'll preface this section by saying that your mileage may vary, as different investors look for different things in pitch decks. However, there are some common mistakes that founders run into when presenting their business plans.
When presenting your pitch deck, particularly the use of funds slide, be prepared for a thorough questioning from potential investors. These questions are not just about validating the information presented, but also about gauging your understanding of the business and your readiness to handle the challenges ahead.
Remember, the key to effectively addressing investor questions is not just in providing the answers, but in demonstrating a deep and thoughtful understanding of your business. Your responses should reflect thorough preparation and confidence,
The startup journey can be an exhilarating yet challenging experience, especially when it comes to navigating the intricacies of developing and pitching your idea. It's important to continually interrogate the ideas behind your startup to be sure you're on the right track.
Archie is an AI-powered solutions architect that we developed here at 8base. The way it works is simple: Plug in your startup idea, and within moments, Archie will give you feedback on how attractive your idea would be to investors and how to structure your business model.
That's just the start: Archie will present ideas for monetization, structuring your digital properties and even how you can incorporate AI into your business idea. Archie is free, and you can try it here.