Excerpted from the book on mindful business management, Business Black Belt.
“It is time for us all to stand and cheer for the doer, the achiever, the one who recognizes the challenges and does something about it.”
~ Football Coach, Vince Lombardi
I’ve written much on business plans, business planning, business plan software (of course), all of that is on my website. Plus, we have hundreds of articles about investors and lenders, venture capitalists, human nature, marketing, and everything else at www.businesspowertools.com.
However, I do have a few things I want to tell you now about starting to work with investors.
First… Is there a boom in that doom & gloom?
Einstein said he first spent more time thinking about how he wanted to look at a problem before he set about solving it. What if we looked at our current economic “crisis” (Chinese symbols: Danger + Opportunity) another way? Here goes… What if Wall Street collapsed and nothing more happened? You are still sitting there. The job still needs to get done — Everyone needs to work… The oil companies want you to buy gas. We all need to eat. (Even if you are unemployed, you could be cleaning your home and/or working here and there to help out others…) If everyone does what everyone does anyway, what difference does it really make?
At risk of seeming simplistic, what is Wall Street anyway? Sure, companies raise capital by selling shares on the market, but beyond that it seems little more than a gambling casino… When most people “invest,” let’s face it, they’re gambling. Sure, you may have a “system,” but most are still gambling. (And, behind the scenes, the money is creatively recycled so the same money can be used again and again before its original owner wants it back…)
Anyway, when we walk into a casino, we know that the odds are against us. If it’s not the cards, it’s the programming in the machines. Betting on companies is actually betting on the people running them. Why are we gambling on someone we don’t even know to do more with our money than we can? Yeah, yeah, established companies with seasoned managers… Nevertheless, the curtain has been pulled back and it looks like they aren’t performing very well (or, no matter what they do, things still go wrong.)
Here’s where I’m going…
It seems we’ve become mesmerized by the money itself — the money for its own sake — no longer for what the money can really do. Isn’t it time we got real again and put our money behind the real innovators. What if many more people with more money were inspired to invest it into aspiring new businesses instead? No one cares more about your money than you do. You can watch it grow, help it along yourself, roll-up your sleeves, call friends for favors, etc., and have a little fun. Now you can contribute to creating new things for the world. And your profit in true wealth starts on day one.
It’s what America does best—it’s one thing the rest of the world admires about Americans.
Current statistics are in our favor
At least eight studies have been conducted in both the US and UK to examine returns across the angel investing market. What did they discover?
The average return across all these studies is 27.3% To put this in perspective, the Dow, S&P, and NASDAQ have all had NEGATIVE returns since 1998.
In short, the best game in town for investors by far is to invest in entrepreneurs like YOU. So hold your head up high, exude confidence and let investors know that you have something they need – NOT vice versa.
Finding the boom amidst the doom & gloom…
It may seem like the doom and gloom is all there is these days, but let’s keep going. Let’s take “positive mental attitude” a step forward. I never could really believe that glossing over my observations of things amuck would really work, but I’ve done my best at applying my “positive mental attitude” to every situation. There is another way to look at it… For example, you buy a new car and suddenly you see them everywhere.
The thing in your brain called the reticular activating system (RAS) is what makes you suddenly see so many cars just like the one you just got. Your new car is what’s on your mind… Hmmm… And now you see them everywhere. Likewise, if you can tune your mind/RAS for situations and opportunities that will work for you, you just might start seeing them everywhere too.
JIAN was founded with the intention of helping you to deliver your solution to the world and succeed in building a business around it. Today, the world needs you and your solution more than ever. If you need an investor, tune your RAS for the ones who will work with you. If you are an investor, tune your RAS for a deal you can get your hands on and help. Stop gambling on the deal behind the curtain and bet on an idea whose time has come.
Keep away from small people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great.
~ Mark Twain, 1835-1910, Humorist and Writer
Choosing the Right Investors
Perhaps the single biggest obstacle to raising capital for your business is the idea that investors will be forever breathing down your back—they’ll own you—your entrepreneurial venture, your freedom as you know it, will be over forever. So, the debate rages within your mind whether or not you really want investors and isn’t there a better way to have the money to build your business and still do things your way?
No doubt you’ve heard many horror stories about investors’ meddling. You aren’t alone in this dilemma. Many entrepreneurs don’t want to give up control and don’t want to take money from people who will now tell them what to do.
What hasn’t been explained is how to choose the right kind of investors.
Without this knowledge, many entrepreneurs take money and endure the consequences. Howard Schultz, the CEO of Starbucks discovered the secret after many agonizing presentations to investors. He explains it beautifully when he says that the right investor (and for that matter any employee, board member of the management team member) at Starbucks “must have a passion for coffee and the coffee experience.” Can you imagine a tea-totaling investor who invested in Starbucks as a pure financial play? The phone calls, “What can’t you buy cheaper beans?” “Why do we spend so much money on our stores?” Blah blah blah… On the other hand, if the investor loves coffee him/herself, they will inherently understand (or come to understand) the reasoning behind all of Starbucks moves. In fact, their phone calls and unsolicited suggestions would be in tune with the founder and taken as the real contributions that they are.
How can you find investors who have passion for your business and what you and your products and services are about? This is one of the keys to taking on investors who will support you with much needed growth capital, as well as (and often more importantly) all kinds of other support.
“In my experience, there is only one motivation,
and that is desire.
No reasons or principle contain it
or stand against it.”
~ Jane Smiley: Pulitzer Prize—winning American novelist
What is the Incentive for Investors?
You can burn a lot of time chasing investors, listening to their stories, and jumping though hoops. In the meantime you could be building your business. Timing is everything. Perhaps the first thing is NOT to get an investment. You’re not ready, the valuation will suck and you may not appreciate the investors’ participation in your day-to-day activities. I can go on…
Investors generally have no incentive to invest now vs. later. They have the money, you want it. It’s almost human nature to hold back. There is one thing you can do; however, that is to build your business. Use your business plan to figure out what you can do while you await your chance meeting with the perfect investor—almost as if sent on command from central casting, they appear. I don’t care how hard you try, it’s like meeting the love of your life… just when you weren’t looking (and you really weren’t—likely ecstatically preoccupied with another product) they appear. If you allow God/Nature/The Universe/Allah to send your investor the same way, and you are happily engaged in building your business in every which way possible.
So, if you were to look first at everything you can do to create value in your company before opening your kimono, you’ll enjoy an unusual advantage. As your business grows and succeeds, the investors will pay more to get in. When you can show them a demonstration of what you can accomplish by bootstrapping for a while, they will be more comfortable with what you can build with their money. Henry Ford said, “Hustle while you wait.” (That’s probably my favorite quote ever.) We spend a lot of time waiting, but if we let that go and get busy with what matters… building our businesses. Knowing this they will pay more for their equity in your company the longer they wait. That’s their incentive, but first you have to build the attraction. You will feel better about yourself, have a firm grasp on your realities and become a desirable partner.
“Priorities lead to prosperity.”
~ Michelle Singletary: Nationally syndicated columnist for The Washington Post
Keep running your business!
Keep the running of your business more important than chasing the investment.
The possibility of an investment can be very distracting—as you may know, many of these deals fall apart. Keep running your business. Even while the investment is going through, make running your business your higher priority. Most professional negotiators will tell you that maintaining your ability to walk away from a deal is your greatest strength.
Here’s a scenario: You become absorbed in your investment deal, the business slips a bit, at the moment of truth, your angel says, “You know, the business has slipped, we need to recalculate my shares…”
A) S/He’s well within his/her right to do this, but now you know more about his/her nature: Nail you very chance they get. Perhaps you can talk your way through this, but is this investor likely to help you or become the stuff of entrepreneurial horror stories? Look forward to getting nailed again.
B) Your business may have slipped a lot… Now you are desperate, the deal gets worse, but you have to take it anyway. Yuck.
C) If you had maintained running your business, it may not have slipped and may have possibly grown–keeping you in the driver’s seat for the investment. Or at least in a better position to recalculate in your favor. Even walk away because you don’t like the deal or the investor.
“Create a definite plan for carrying out your desire, and begin at once,
whether you’re ready or not, to put it into action.”
~ Napoleon Hill, 1883-1970, Author, Think & Grow Rich
Business Black Belt Notes
• Investment in your business is likely the best bet going.
• What would you want to know before investing in a business?
• Look for investors who have a passion for your industry and your business
• Keep running your business during investor negotiations
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