Growthink Blog

Growthink on the Town: Rio, Moscow, and Old Berlin… In 36 Hours


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Sounds like a lot of territory to cover in such a short amount of time, doesn’t it? Surprisingly, it wasn’t. I managed to do it all… within one square mile or less.

The wonder of being in LA and having clients all over the world is that there’s one particular destination to which everyone is drawn.  In addition, it’s fairly central to travelers doing business in the western half of the U.S.

No, it’s not Fresno.

Las Vegas is a desert Mecca of entertainment, gambling, and business.  The latter is conducted everywhere from conference centers and meeting rooms, to poker tables, bars, restaurants, music halls, and nightclubs.  Low and behold, I found myself in precisely such a scenario last week, accompanied by two Growthink colleagues and a handful of Brazilian clients.  I knew, immediately, that this trip would be ripe for a sitcom episode.

My associate, Tristan, and I must have been dreaming when we thought we could fly in and out of Vegas for a day-long meeting.  “We’ll have a productive day,” we thought, “and then we’ll just have a cocktail or two and head to the airport.”

Cut to 8p.m., when the entire gang of us could be found at Red Square – the infamous Russian destination in Mandalay Bay that features a plethora of caviar and spirits.  Flights of sample wheat and potato, flavored and un-flavored vodkas were delivered to our table; and we relished in tasting each and every one, discussing the bouquet and the lingering effect of the smooth liquor on our palettes.  In the midst of an amplified discussion, Tristan and I announced our impending departure and were immediately harangued into calling Southwest to arrange morning flights.

How can one argue with a handful of handsome Latin American men? Well, that was my excuse, at least – I can’t speak for Tristan!

After securing two seats on the 10:45a.m. flight to LA, we settled back in at the table and proceeded to talk about everything: politics, music, travel, the state of the economy… no subject was left untouched, and no better time was had.  A singer by training, I was urged to perform for the group – which I did, right in the middle of the restaurant!  Only in Vegas would no one give a second thought or a glance to a gal belting out an impromptu showtune.

Carrying on with the cabaret vibe, I suggested we continue the party at Forty Deuce – a burlesque club reminiscent of old Berlin: bawdy but glamorous; fishnets and feather boas; red leather seats and bottle service.  Having worked for the owner prior to joining Growthink (I led corporate development initiatives for the parent company), I was able to secure the best VIP seats adjacent to the stage.  The next two hours found us smiling, dancing, watching the show, and having an all-around amazing time that would not have happened if we weren’t in a place like Vegas.  It inspired a camaraderie, which already existed from prior meetings but was enhanced by an environment of slightly daring opportunity.  I mean, how many times does a one-day business trip turn into a 36-hour excursion?  

When we finally shut our eyes that night, able to find last-minute rooms thanks to the down-season hotel occupancy rates, we knew we had solidified a long-term client relationship.  More than that: we had developed friendships.

The next morning we gathered for coffee in the lobby before heading to board our plane.  Bleary-eyed and tired, but anxious to proceed with our combined business-planning project, we all laughed, shook hands, and bade each other farewell until the next meeting in 2009.

The best part?  That one’s in Brazil.

Stay tuned for a blog about Carnival!

An Interview with Guy Kawasaki


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Growthink's Co-Founder Dave Lavinsky had the opportunity to speak with entrepreneurship guru Guy Kawasaki last week. Guy is the Managing Director of Garage Technology Ventures. His blog, "How To Change the World," is ranked among the world's top 100 blogs, and he is a successful author. In 2004, his book "The Art of the Start" was a BusinessWeek bestseller.

You can click here to listen to the entire interview or download the transcript: http://www.growthinkuniversity.com/public/226.cfm

In the interview, Guy spoke openly about the things to keep in mind when seeking venture capital, the words to avoid using in any conversation with a VC, and his new book, "Reality Check: The Irreverent Guide to Outsmarting, Outmanaging, and Outmarketing Your Competition." For those seeking capital, there’s also an interesting eHarmony.com vs. HotOrNot.com comparison to listen for.

Also, we encourage entrepreneurs to visit Guy's site Alltop.com, specifically these three sub-categories:

* Innovation
* Startups
* Venture Capital

To listen to the interview or view the transcript, visit this link:
http://www.growthinkuniversity.com/public/226.cfm

Private Placement Memorandum (PPM) Mistakes


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Far too many businesses fail to raise capital because they lack the proper documentation, or because their marketing and offering materials (business plans, private placement memorandum,  investor presentations) are unprofessional, unpersuasive, inadequate or incomplete.

If you are raising capital from multiple private ("angel") investors, a private placement memorandum (PPM) is a necessary part of your documentation.  Unfortunately, however, the vast majority of entrepreneurs and business owners are not familiar with details of preparing a private placement memorandum and marketing a private placement offering.  In too many instances, this lack of knowledge prevents them from raising necessary capital, or -- even worse -- it can create costly liability problems.

To assist entrepreneurs, we created this report - "The Top 10 Private Placement Memorandum Mistakes" - to help answer some of the most frequently asked questions. We hope the report will help prevent many of the common errors we see businesses make during the process of preparing a private placement memorandum, marketing it to investors, and raising (or failing to raise) capital from private investors.

Some common questions answered in the report include:
- When do you need a private placement memorandum to raise capital?
- What types of disclosures must be made in a PPM?
- How can you market a private offering, while retaining a Regulation D exemption?
- What types of intermediaries and "finders" can promote a private offering?
- What types of investors can participate in a private placement?
- What are your options for preparing a private placement memorandum?
- How often should you edit or update a PPM?

Click here to download the report: Private Placement Memorandum Mistakes

 

 

If you are seeking professional assistance with your PPM, Growthink offers professional private placement memorandum writing and consulting services.  

 

Or, if you're writing your PPM yourself, you can use our Sample Private Placement Memorandum Template to finish your PPM quickly and easily, so that you spend less time "preparing," and more time speaking with investors.


Poll: Do you think GM, Ford, and Chrysler should be bailed out?


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Just yesterday, America's 3 largest automakers -- Ford, GM, and Chrysler -- all submitted business plans to congress. 

Here are the original copies of the plans:


Key components of the business plans

 

  • Increased production of fuel-efficient vehicles and energy-saving technologies
  • Rationalization of brands, models and retail outlets
  • Reduced wage and benefit costs, including further reductions in executive compensation
  • Significant capital structure restructuring
  • Consolidation in manufacturing operations

 

Funds requested

  • Ford is requesting a standby letter of credit for up to $9 billion. 
  • GM is requesting loans of up to $12 billion. 
  • Chrysler is requesting loans of up to $7 billion.

 

The potential repercussions...

 

  • The automakers - especially GM and Chrysler - predict catastrophe if they do not receive the loans.
  • In its business plan, GM claims that without "such assistance, the company will default in the near term, very likely precipitating a total collapse of the domestic industry and its extensive supply chain ... The cost of failure in this instance would be enormous for everyone."
  • Chrylser argues that the $7 billion is "necessary to prevent further economic decline, if not outright economic depression."

 

What others have to say

  • Recent polls have shown varying degrees of support for the bailout among the public.  
  • According to a USA TODAY/Gallup Poll, 47% of adults believe "providing loans and other help" to auto companies is "not very important."
  • A poll conducted on Nov. 11-12 by Peter D. Hart Research Associates, found that 55% of Americans believe that the government should provide loans to American automakers, while 30% oppose.
  • A CNN/Opinion Research Corp. poll, conducted by telephone on Dec. 1-2 with nearly 1,100 people, showed that 61% of those surveyed oppose government assistance for the major U.S. automakers.



Entrepreneurs: what do you think?


Here at Growthink, we're curious to hear what entrepreneurs -- who are used to shopping their business plans around to lenders and investors -- have to say about the automakers' business plans and potential bailout. 

 

 


Growthink Services in a Down Economy


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Recently, we at Growthink have received a flood of inquiries from entrepreneurs and business owners, asking for advice on how to proceed in these turbulent times.

The fact of the matter is that it is hard to reassure anyone, in light of recent economic circumstances, that there is an upside for business owners who are revising short/intermediate goals or looking for capital. Small, medium, and large companies alike are hesitant to put themselves out there in an unstable, cash-constrained environment.

Yet amidst the seeming cynicism, we at Growthink are still seeing extremely positive movement amongst funds – especially around our headquarters here in California – that have not only the moneys to invest, but also the eagerness for new, niche deals.

Historical patterns indicate that downturns, such as the one in which we presently find ourselves, result in some of the highest levels of new company formation.

What this proves is that entrepreneurs – no matter the ebb or flow of Wall Street and Main Street – are consistently creative people, who seize upon circumstances and leverage them to start and/or grow their businesses. They reflect the American Dream so often referred to in the latest Presidential campaign.

Growthink's mission and vision, as founded by such entrepreneurs, is to help aspiring peers build and set forth strategic plans to gain momentum in their marketplace; and to hopefully attract investment dollars from the right people at the right time.

With all of that said, it comes down to a few key characteristics of good deal-making: confidence, relationships, and perseverance. Just because the opportunities are out there, doesn't mean they are easy to find, qualify, negotiate, or transact.

Our expertise, in working with investors on a daily basis, renders us the ability to quickly identify an outreach strategy, to get to a "yes" or a "no"; and to conduct diligence with interested parties, speeding the time to a closed deal. What this enables our clients to do, rather than expending 100% of their efforts on raising capital, is to focus on the day-to-day operations of their businesses. Ultimately, this is where potential investors want to see busy executives utilizing their skills and capabilities.

At Growthink, we welcome the opportunity to speak with you about our investment banking and consulting services. Should you be interested in scheduling a call, please contact us with the best day, time, and way to reach you, and we will happily accommodate.

Growthink Announces Launch of Growthink University


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As a supplement to our consulting practice, we're pleased to announce the launch of Growthink University, our new membership club dedicated to teaching entrepreneurs and business owners how to raise capital for their businesses.

The club assembles 10 years of capital raising expertise and methodologies developed and refined by Growthink, and gives entrepreneurs an additional "Do-It-Yourself" option to perfect their business plans.

Growthink University covers topics including, but not limited to:

  • The biggest mistakes that entrepreneurs make when trying to raise capital and how to avoid them.
  • How to overcome the capital-raising challenges faced by first-time entrepreneurs.
  • The difference between pre-and post-money valuations and making sure you don't get taken by investors.
  • The ten biggest mistakes that companies make in their business plans.
  • The winning ways to get meetings with investors -- and the most important things to know before sitting down at the table.
  • What financial projections need to prove about your business

 

Go to Growthink University (http://www.growthinkuniversity.com) to learn more.


Windfalls and Pitfalls: Private Equity and the Individual Investor


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How many times have you heard someone say, "Don't put all your eggs in one basket"?

When it comes to any kind of investing, this is very good advice.

But, if this is the case, why don’t private equity investors diversify?

Unfortunately, most individual investors in private equity significantly under-diversify their portfolios -- investing in one or only a handful of companies.  By so doing, they both greatly increase their risk profile and greatly decrease their probabilities of seeing investment return.


Investment Fundamentals: 3 Illusions and What To Do Now


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As the investing month of October mercifully draws to a close, there is now a palpable sense of calm in the financial markets.  While the horrific damage – in both value and psychological terms – is very, very real, and may take years from which to recover, there has been a healthy mindset transition to a “what is to be done” thinking, feeling and acting.


Preparing for a Recession? Don't Make These 3 Common Mistakes


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In times of economic crisis, far too many business owners revert to “safe mode” as panic spreads. A "responsible" course of action typically includes one (or more) of the following:

  • Tightening purse strings
  • Laying off key employees
  • Putting growth plans on the backburner

Doing anything different may be seen as “risky”.

But this conventional wisdom couldn't be more wrong.

An old adage states, "Only dead fish swim with the current," and that philosophy applies to your growing business as well.

Here we highlight the three biggest business mistakes made in tough economic times, and the implications of each:


Mistake #1: Shrinking your marketing budget

When there is less money to go around, budgets get cut. But it's a bad idea to take too many of those dollars away from marketing initiatives.  Actually, if you have the resources, now is the appropriate time to continue (or  expand) your marketing.  Why? Most of your competitors will cut their budgets, out of a “knee-jerk” reaction to the economic downturn -- leaving you a greater window of opportunity to get your message across to your market.  Business owners who “stick it out” during tough times will likely enjoy increased market share once the economy rebounds.


Mistake #2: Laying off key employees


Another, often more challenging decision, is whether to cut staff.  Whatever you do, don’t lay off your top talent. Great people are your most valuable resource -- hold onto them.   In fact, if you’re in a position to hire, now is a great time to hire, because so many other businesses will be shedding their top talent.  


Mistake #3: Putting growth plans on the backburner

Possibly the most damaging long-term effect of a troubled economic climate is when a business chooses to put its growth strategy on hold to "weather the storm."  If you cut back on new product development and innovation today, you will have fewer product offerings when the market bounces back.


Warren Buffet’s recent advice to investors is also great advice for entrepreneurs:

Be fearful when others are greedy, and be greedy when others are fearful.


At Growthink, we advise our clients to pursue their growth initiatives despite the downturn. There is no better time to grow than today.

 


Growthink Launches Turnaround Consulting Service


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If you’ve glanced at newspaper headlines, turned on a television, or read any of our blog posts within the last several weeks, you know that this is a turbulent time for the global market. This brave new world has lead to widespread and palpable effects on small and middle market companies everywhere. The credit crunch, the volatility of the stock market, and the uncertainty of the new political landscape have left many entrepreneurs and small business owners experiencing emotions ranging from mild trepidation, to full-fledged panic.

As scary as the landscape can appear right now, we believe firmly that businesses that look for the opportunities provided by the current climate can position themselves to experience success.  In order to help companies achieve that success, Growthink has launched a new service: Turnaround Strategy Consulting

Simply put, there are numerous steps businesses can take right now to turn the corner. Our decade of experience working with a broad spectrum of firms, from start-ups to Fortune 500 companies, has allowed us to develop comprehensive, analytical methodologies that indentify the cause of financial failures as well as realistic solutions that can be quickly implemented to turn businesses around.

Since 1999, Growthink has provided strategic guidance to companies through rapidly changing markets and economic climates, including the wake of huge economic crises, such as the end of the dot-com bubble and the post 9/11 financial landscape. Even in light of the 2008 “Credit Crunch,” Growthink is able to find opportunities within the chaos and create solid strategies for our clients.

Even businesses that have not experienced dramatic shifts, but have felt a recent downward trend can benefit from Growthink’s consulting.  Improving margins, identifying the right customers, and implementing effective management are all areas that can make a significant difference for any firm in this economic environment.

Additionally, as a full-service firm, our turnaround strategy solutions can examine and assist with all aspects of business growth, from branding, public relations, business planning, web development, internet marketing, and investment banking.

If Turnaround Strategy Consulting can be of use to your business, please visit our service description page here or contact us by phone at 1-800-967-6419.


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