Good news: you’ve landed a meeting with an investor who’s prepared to capitalize your company. But don’t start celebrating yet. Just because you’ve set up a pitch meeting is not a guarantee you’ll close a deal. The importance of thoughtful and thorough preparation cannot be understated. If you don’t come prepared, you’ll leave empty-handed and disappointed.
Raising capital is very time-consuming and takes a lot of hard work. But if you do your homework, you drastically increase your chances of success. If you’re sitting in an investor’s office completely prepared, you’re moving in the right direction.
Kinds of Investments
What kinds of businesses has this person invested in in the past? Does your company align with his/her past investments? If so, make a case for that. Investors typically stick to their own niche and invest in the same industries again and again.
Stage of investment
What stage company does the investor prefer to capitalize? Do they prefer to get in on the ground floor and reap a high rate of return? Or, do they wait until a product has proven itself in the market before investing in it? Focus on investors who prefer your current stage of development.
Size of investment
Know how much the investor is prepared to invest. Ask for too much or too little and you’ll likely leave empty-handed.
What is your potential investor’s expected rate of return? Make sure you know their expectations before walking into the meeting with prospective investors.
You’ve made the exertions and bootstrapped your business. Now what? Next comes the large task of raising outside capital. Meeting with prospective investors and persuading them to see your shared vision in your firm a critical step plus the question many young entrepreneurs request from me is,
“what do I must ensure it happens?” It all begins with three essential documents.
An Executive Summary
First, you may visit investors without an executive summary. It is a one-page document that addresses the important components of your business. In your executive summary, you
should answer these eight questions:
More often than not, people have let me know that these need more than what a page to reply to all these questions. However, you don’t. Regardless of what your company is, if you explain it in one page generally, you then don’t know it and, in consequence, neither will anyone else. Keep your executive summary succinct and confident. No potential investor is going to read something that is several pages long. They need the meat of your corporation plus your proposal. Take time to trim get rid of the fat.
In the end, regardless of how convincing your executive summary is, every investor must
understand the financials regarding a business. To generate a basic set of monetary projections and, like your executive summary, keep it to one single page. Your projections should show investors that you have a good understanding of just how income expenses will work in your corporation, in addition to how you like to generate cash.
Finally, you’re going to need a PowerPoint presentation. Right here is the presentation that you’re going to give an investor once you finally sit facing them or share online via email. Like your executive summary, this has you noticed your way to share crucial details of your enterprise within one limited time frame. In our experience, I’ve found that the perfect presentations reflect the executive summary. Share the same aspects because, in the long run, that’s what an investor wants to understand your business.
Attempt to keep your presentation short. Should you’re wondering just how long exactly, I generally recommend following 10/20 rule. For every 40 minutes that you believe you’re in order to have with an investor, spend 10 minutes talking about your particular business and sharing your presentation, and the following twenty to thirty minutes getting feedback and answering questions. By doing so, you may respond immediately and tailor your pitch driven by the way the investor sees what
you presented. Every investor is different and maybe may be more concerned or serious about one element than another. Use their questions and feedback to your current advantage.
Together with your executive summary, financial projections, and presentation in hand, you will be ready to converse with investors and maintain onto the next phase of your corporation journey.
Maybe you’re holding on to a fear of failure or regret from the past. Maybe it’s a fear of the unknown. Maybe it’s a bad relationship you can’t bring yourself to walk away from. Whatever it is, everybody has a thing or two they would benefit from letting go of. Especially if you want to be a successful entrepreneur, the ability on how to move on and let go is directly related to your future success.
When we refuse to let go, we let ourselves get stranded in the past. Letting go lets you begin imagining a better future. How might your life change if you let go of your demons and chased a dream? The world is your oyster, and by refusing to let go, you severely limit yourself. Dare to imagine. Dare to dream.
2. Push Past Your Fears
Work to quiet the little voice inside yourself that tries to convince you: “It’s too late”; “I can’t afford it”; “I don’t have the skillset”; “I’m not smart enough”; or, worst of all, “I’ll do it tomorrow”. It’s human nature to succumb to our inner fears and trepidations. To be successful, however, you must learn to push past them.
3. Cut the Excuses
“Just cut your excuses!” Chances are, you heard something like this from your mother countless times as a kid after you screwed up. But, it bears repeating here. Excuses only serve to hold you back. Rest assured, whatever your excuse is, it isn’t good enough in the hustle and bustle of the business world. The first step to letting go is to let go of your excuses.
4. Leave Failure in the Past
Failures happen. Don’t allow yourself to linger on them for too long. Don’t get me wrong, it is crucially important to learn from your failures. But, there is a difference between learning from your mistakes, and letting them fester. Accept that failure happens, use it to your advantage, and move on.
Do you really, really want your business idea to succeed? Of course, you do. But sometimes entrepreneurs get stuck, frozen in their tracks and afraid to take chances. If you want to succeed as a modern-day entrepreneur, you’ve got to try new ideas, take a few chances and think of your future from a whole new perspective.
By Scott Duffy
Maybe you’re holding on to a fear of failure or a regret from the past. Maybe it’s a fear of the unknown. Maybe it’s a dead-end job you can’t bring yourself to walk away from, a bad relationship, destructive habits, or the wrong kind of friends. Got anything you want to add to the list? Ultimately, if you want to be a successful entrepreneur, this thinking will just lead to failure and frustration. Here are 4 strategies to help you let go and drive your business success:
The quickest way to stop holding yourself back is to stop the excuses, quit holding yourself back. Stop focusing on reasons and start focusing on results. Beethoven went deaf, but among his late-in-life works is some of the greatest music man has ever heard. Milton was blind, but he wrote literature that will be read until the end of time. Whatever your excuse is, it isn’t good enough. The first step I want you to take is to let go of all your excuses. Simply step away and get on with it.
We all have our reasons for not getting started. Some of us are poised to jump right into entrepreneurship, but others, most of us, feel hesitant to take the leap. As a result, you create excuses and put up roadblocks for yourself. If any of these sound familiar, you need to quiet the voice inside yourself that is mouthing these mantras: It’s too late; I can’t afford it; the project’s too big; I don’t know the right people; I didn’t go to the right school, or the most common reason, I’ll start tomorrow.
Unfortunately, our fears, combined with the crazy stories we tell ourselves about why we can’t succeed, keep us from getting started.
Don’t dwell on your failures, embrace them and then let them go. Put yourself out there—cold-calling, selling door to door, and learning how not to take rejection or failure personally. Failing is an integral part of being an entrepreneur. Accept it, use it to your advantage, and move on.
What would happen if you decided to let go? How would your life change if you really decided to go for it? What would happen if you made your biggest dreams come true? Would you spend more time with your family? Would you pick up a hobby? Would you buy a new home? Would you travel around the world and check items off your bucket list? Would you create a charitable organization that gave back to others?
The only thing keeping you from achieving everything you want in your life is the crazy story you’ve made up about why you can’t have it. Now is the time to seize your opportunity and create the life you deserve.
“Team” is the most powerful word in business. A hard-working, dedicated, and effective team is integral to the success of any business, and they are never easy to build. Business team building can be tough, check out these three steps.
There are three steps to business team building, and it all starts with the hiring process. Before we dive into our three tips, take a moment to consider how important the hiring process is and the opportunities it presents. Hiring people is the only area in business where you have near-perfect information.
When the hiring process is executed properly, you will know nearly everything there is to know about your candidate’s professional life (and in the digital age, a fair amount about their personal life as well). In no other aspect of business life will you have so much information at your fingertips.
Clarify the Position
Before posting a job listing or beginning the interview process, you must know what it is you need. Be specific! It’s not enough to say you need a communications expert. What kind of communications? Public relations? Social media? Digital content? Email communications? Understand and clarify what exactly it is you need.
You Can’t Talk to Everybody
As an entrepreneur, you are busy. You are building your business from the ground up and juggling a dozen responsibilities at once. Though a great number of solid resumes might come across your desk, you don’t have the time to interview everyone who submits an application. Don’t be afraid to be picky. Meet only with those candidates that most closely match your company’s needs.
Testing, 1, 2, 3…
Once you think you’ve found your ideal team member, test them thoroughly before making the hire. This may be as simple as conducting multiple interviews and having the candidate complete a writing sample; or as complex as bringing the candidate on as consultant or contractor before hiring them full-time.
Again, you are more than justified in being picky. It’s important that you make sure your candidate is up to the task, is a solid fit for your company’s culture, and that they are the kind of person with whom you are comfortable making a long-term investment in.
Lastly, what happens if you follow these three steps, but your candidate lets you down? Don’t hesitate to fire them and move on to the next person. In order to run a successful business, you can never settle.
When you’re building your business, one of the first decisions you must make is choosing whether to travel the path alone or start looking for a business partner. Some entrepreneurs are determined to make it on their own, while others see the value a partnership can provide.
This is no easy decision and it’s no wonder that one of the most common questions I’m asked is, “Should I have a business partner when launching my company?” While I can’t answer this question for you, as everyone’s business and working style is unique in its own way, I have learned that there are four important factors to consider if you decide to venture forward with looking for a business partner.
Share a Common Vision
The absolute first necessity is having a shared vision with your business partner from day one. I can’t tell you enough how important it is that both of you are headed in the same direction from the very first day you are in business together. If you aren’t on the same page, you are guaranteed to run into problems down the road.
When looking for a business partner, if you are having trouble convincing someone of your vision, that person will likely never completely share your passion and that can become problematic. Find someone who is as excited as you are about your business journey.
Second, it’s important that your partner’s temperament complements yours. Say for example that you are very high energy. It makes sense for you to start looking for a business partner who is more relaxed. Two dreamers will have difficulty getting work done, but two realists may never dream up something daring and unique. Ultimately, you want your energies to balance each other.
Complementary Skill Sets
Just like your temperament, you want a business partner who isn’t identical in skills and brings something different to the table. If you are a great salesperson, you may want a business partner who is a great developer or analyst. The key is to not have an overlapping skill set, which brings me to the fourth and final factor.
Finally, you want a business partner whose network doesn’t overlap with your own. Just as with having your own unique skill sets, you want greater access. You want to be able to leverage with your partner a network that introduces you to as many different people as possible who can help you launch and grow your business.
The more people – and the more people in different industries – with whom you can interact, the greater chance you have of making valuable connections and, possibly, investors and other team members.
As you think about looking for a business partner, remember the four key elements: share a common vision, make sure your temperaments complement each other and that you have non-duplicative skill sets and non-overlapping networks. If you can find a business partner that fits, you will be on the right track to having a successful business team.
As a small-business owner, you are all excited about getting started in business and most likely are considering forming a partnership. The right partner can augment your skills and experience and may increase your chances of landing the new business and jump-starting your success.
By Aaron Young, CEO of Laughlin & Associates
Before you commit to a business relationship there are real advantages and disadvantages to consider before entering a partnership.
First of all, in the early days, everybody’s excited and everybody wants to make the project work. As potential business partners, you want to lock arms and be best friends. This is where I see start-up owners make premature agreements. Potential partners agree to do a 50-50 split or bringing on multiple partners and splitting the ownership – and profits, in thirds. The danger here is that you are not considering the long-term implications of these partnerships and what the division of this company under these terms will mean down the road.
If you are the one launching the company and inviting a potential partnership, first of all, you need to think about how much you are willing to give up in the profits. For example, if your company was worth 10 million dollars right now, how much would you be willing to give up for that partner?
On the flip side, you need to discover what your potential partner is going to bring to the business at the launching of the company. What are they going to bring in to you now in the early days that’s going to be worth a third of that 10 million dollar company down the road? The first thing to think about is how much stock do you really want to give up for what you’re getting right now?
The next thing is, if you decide to go into that partnership, figure out how you can get out of the partnership. You need to have a buy/sell agreement and exit strategy. This means a written statement in your corporate book that says: “This is how we unwind the relationship so that we can go away in a friendly way.” It’s just math. It’s not a fight.
It is important to clearly define roles when you are bringing in multiple business partners into your operation. There is a difference between owning stock, being an owner and being an employee doing a certain job inside the company.
Even though you and two other people may have the same ownership, you need to clearly define what your individual roles mean and consider issues about what jobs you each are taking on and the salary for those positions. If you go in and you say, “We’re all just going to be equal,” this can cause complications. Invariably in partnerships, somebody ends up doing more and somebody ends up doing less.
One of the partners is totally committed to this project and another has three or four projects that are dividing their time. Remember, ownership is one thing, but make sure you’re paying a salary commensurate with the job and with the hours and the time and the values being brought by that individual.
It is important to complete this strategic planning prior to forming a partnership, keeping in mind the long-term company vision.
Most entrepreneurs are impatient by nature. And why wouldn’t they be? They have an exciting “cool idea” and are itching to take the concept from coffee shop napkin to execution. Before you rush into executing, however, there are three important steps you should take on how to succeed in business:
The first logical step in developing any successful business is to set goals – both for yourself and your new venture. Studies have sown that setting forth clear goals increases an entrepreneur’s likelihood of success by as much as 20 percent. That’s right. Before doing any of the hard work, by simply setting a goal for yourself, there is a 1 in 5 chance you will be successful.
Your goals must be specific, measurable, and subject to deadlines. In other words, you should know what you want to accomplish, and by what date. To get started, make yourself a list of all that needs to be done between now and accomplishing your goal. Then, break it down. Make it more manageable. What can you accomplish in the week? Month? Year? You get the picture…
Typically, the last section of a business plan is reserved for your financial summary. You might reasonably assume, therefore, that the financials are the least important detail. Well, you’d be wrong. What investors often care most about is your financial plan. So it behooves you to prioritize your financials early on, and write your business plan backwards. Once you develop a sustainable financial model, the rest of the plan will fall into place all on its own.
In developing any successful business, it is critical that you anticipate what might go wrong. Every company experiences obstacles, but it those that can anticipate them and clear them out of the way before they cause real damage that succeeds in the long-run. In order to do so, prepare to make sacrifices. You may need to tweak your product, refine your sales pitch, overhaul your team, or cut costs. Picture your potential obstacles, and decide in advance how you might overcome each of them.
Starting a business with a partner is exciting! You’ve found someone who shares a common vision and is as excited about your idea as you are. But, first things first: you absolutely must draw up a partnership agreement. A partnership agreement is a legal document that defines you and your business partner’s rights and responsibilities.
This is an incredibly personal document that should address every concern you and your partner might have about doing business together. There are a multitude of things to things to consider when drafting a partnership agreement, but following, I will share with you three of the most important considerations:
First things first: who owns the company? And how much of it? How are the two of you going to divide equity? Are you equal partners? Or is one person taking a majority of equity? The longer you wait to have this conversation, the murkier the waters become. Its important to clearly define ownership right up front.
When ownership is settled, you and your partner should determine your financial and time commitments to the business. Are you both equal contributors? And at the same time? The last thing you want in a business relationship is to feel like you are contributing more than your partner, or visa versa. Make sure that both you and your partner understand how much time and money each of you is expected to give.
Finally, every partnership agreement should address what happens to a partner’s equity should they choose to leave the business. It can be frustrating to be the remaining partner in your business after your partner has left, yet is still receiving the benefits. To avoid this, your partnership agreement must address vesting – or, how the equity returns to the partner who remains with the business.
In the early stages of your business, sit down with your partner to address these items and any others you feel apply specifically to your partnership. Because this is such a crucial and intimate conversation, do not put it off until a later date.
You want these issues settled long before the partnership is tested. To ensure everything has been sufficiently covered, find good legal counsel. Although there are templates for these sorts of documents, the value of an attorney to make sure to make sure all your bases are covered cannot be understated.
People make a huge impact on your life and on your success as an entrepreneur.
The time you spend with others is both sacred and a valuable investment in your future.
Ironically, the first step in building a strong professional network is to take inventory and eliminate those who should not be on it. You want to surround yourself only with people who are heavily interested and invested in your success. To get started on narrowing it down, try writing down the names of the five people you spend the most time with (excluding your family). If there is anyone on that list who does not support you and your ventures, cross them off of your list, and work to find a replacement.
Do you have a mentor? Odds are, you probably do. But what few people recognize is that you should have more than one. In fact, you should have three. Find people – not just one person – who share in your aspirations. How can you expect to build a million-dollar company if you refuse to get advice from people who already have? Immerse yourself in the way your mentors see the world. If you spend enough time with them, part of what makes them successful might just rub off on you.
It’s not enough to be mentored. You should also be a mentor yourself. For example, working with younger entrepreneurs can be mutually beneficial. On the one hand, it may help you to see things from a whole new perspective. On the other, you’re passing off your wisdom to the next generation of great entrepreneurs.
So you want to be Superman. Here’s how to avoid your kryptonite Aka Not Delegating work.
What comic book character best describes the entrepreneur? Superman, for obvious reasons. Entrepreneurs are the heroes of business. They start companies, execute tirelessly, and are on call 24 hours a day. In the early stages, they put their stamp on everything, assuming responsibility for all decisions. They’re the driving force behind all that gets done and delegating tasks will help.
But we all know there’s more to the Superman story: kryptonite, one thing that can knock Superman down. For entrepreneurs, our kryptonite is the failure to delegate. If you want to grow your business and maximize its potential, it’s crucial to hand over responsibility to others—the sooner, the better.
I’ve spoken to countless young entrepreneurs over the years. And although their business models and industries vary, they often them make the same mistake: taking on all responsibility of their business. The difference between the entrepreneur with the million dollar business and the one with the $100K business boils down to delegation.
The most successful business owners spend their time on what is most valuable to growing their business and delegate the rest to others. This can be difficult for many entrepreneurs, as we’re used to being in control of everything. But you’ll soon see how much more you can accomplish when you stop insisting on handling everything yourself.
Ready to grow your business?
Make a List of Everything You Do
For one week, make a list of everything you do (both for your business and personal life). Include as much detail as possible. Circle all the administrative tasks—reading email, scheduling meetings, creating presentations, standing in line at the post office, returning phone calls—that don’t require your close level of attention and that you can hand off. Next, take a look at non-administrative tasks and decide what can be handed off to other members of your team.
Same Systems, Platforms, and Tools
Get all your employees and assistants working on the same platforms and systems for email, contacts, and calendars. Live in the cloud with shared folders, voice calling, and video calling. Make sure that your infrastructure is in place so you can grow and scale with little effort. This will also make it easy for you to check in on tasks you’ve handed off to others.
Once you have delegated administrative tasks to other team members, it’s time to get back to your role as an entrepreneur, CEO, or whatever position in the company suits you best. It’s here when you can put your talents to best use—and grow your business, of course.
Entrepreneurs are often in such a rush to find startup funding that they often fail to carefully consider all of their potential financing sources. Contrary to popular belief, you can afford to slow down. Yes, your business needs money, but it is in the best interest of your new venture to pause and make sure your startup capital is coming from the best source possible.
Below, are the most common sources for new business capital and the advantages and disadvantages of each one.
Friends and Family
If this is a new business or a novel product; or if the management is inexperienced, consider family and friends as potential investors. These are people that love you and want to support you, and may therefore fund ventures that are little more than ideas.
Investments from family and friends are especially valuable because they often come at an incredibly early stage, when obtaining funding form management firms would be unlikely. Investments from family or friends typically range from $1,000 to $25,000.
Angels are wealthy and/or successful individuals – often entrepreneurs, themselves – who are looking to invest in early-stage companies in order to earn an acceptable rate of return. They may operate as individuals or in tandem with others.
They may also look to get involved personally by mentoring the other owners of the operations they fund. This can be a fantastic opportunity to both learn from already successful entrepreneurs and fund your startup simultaneously. Angels will typically invest $25,000 up to $250,000.
Crowdfunding is a relatively new form of capital generation brought about by the advent of the Internet. Simply put, crowdfunding pools very small amounts of money from a very large group of people.
When done successfully, the result is one large lump sum of money that can be used towards funding a single project. In the digital age, crowdfunding is most frequently done online, but can still be done in off-line, “analog” networks as well. There are four principal forms of crowdfunding:
Venture capital is money exchanged for an equity stake in a company. These are often early-stage investments and are enacted by very experienced investors. Growth is typically the motivating facor for obtaining venture capital, but these individuals may also bring managerial, operational, and technical experience and mentorship to the table.
In return for their typically large investment, venture capitalists commonly demand large portions of equity in the businesses they invest in. Investments from venture capitalists usually range from $250,000 on up to millions of dollars.
To reiterate: don’t be afraid to slow down when raising startup capital. Be sure you are considering the full scope of investors for your business and making an informed decision.