Back to the Business Basics with Creative Coast
This article originally appeared in The Creative Coast on Jan. 7, 2015.
When you’re ready to grow your business, it doesn’t matter whether you’re a gray-haired executive or a bright-eyed entrepreneur: there are a few fundamentals that will always hold true. In my experience as a consultant, banker and advisor, I’ve found the below “business basics” to be relevant, and helpful, to established companies, early-stage startups and everything in between.
It’s the little things.
Sometimes it’s easy to get caught up in the big picture during the early stages of business development. Talking about how your idea is going to be the next big thing can distract your focus away from the practical things that investors find very important, like being able to clearly articulate your business, putting together a strong leadership team, and having necessary documents and financial information ready for review. If investors have any reason to think that you’re unorganized or don’t know what you’re talking about, you can bet that they’ve already started looking for another home for their investment dollars.
Think like the investors you’re pitching.
Think of investors the same way you would think of small business owners. They have money to invest, and they want to use it in a way that’s most beneficial to themselves and their business. Reverse the tables and think about what you would do if you were the investor. What would someone have to do to make you feel comfortable to invest millions of dollars into their idea? Often it helps to think in terms of our individual selves to figure out how to represent an idea in the best way to another person who might share the same concerns.
And remember to speak their language.
When you read, eat and sleep your new business, it’s easy to get caught up in your company or industry’s vernacular. Make sure to remember that your potential investor may not come from a similar background — they may not know the ins and outs the same way you do. Helping an investor feel a connection to your business’ mission is important to securing interest, so getting things lost in translation can be damaging to capital-seeking efforts. Simple is better, so lose the jargon when possible and try to break down things like financial models into easily understandable terms.
The good news? There’s more capital out there than can be reasonably spent.
As the economy continues to strengthen, investors are increasingly looking for new investment opportunities. Your business can be that investment opportunity — if you work to consistently appear in front of investors. And even if you don’t need money now, think ahead. Attend entrepreneur conferences and networking events as frequently as possible. It feels much more natural to ask for investment funds from someone who you know and who knows you than to seem like all you want out of a relationship is capital.
You just have to know how to pitch.
So you’ve organized everything an investor needs into an easily digestible format and you’ve sought out an investment opportunity. What next? It’s surprising that after all of that preparation, the pitch is often the leading impediment to securing capital. All too often, the pitch fails to convey the things that are most important to investors — clearly articulated systems, processes and plans. Remember, also, that an investor is investing in you, so take the time to seek advice and practice until you can pitch in your sleep.
The best for last: asking for capital is selling.
Pitching to investors isn’t a plea for help. It’s a sale. When thinking about how you’d like to craft your pitch, think about sales fundamentals. You should explain how your product solves a problem or fills a need in the simplest way possible.
Many times, our complex business ideas can take us away from the fundamentals. Go back to the basics to think about the core functionality of your business and why it really is the next big thing.