"Why don't my prospects buy? “Even after - especially after - I demonstrate (and they agree!) such awesome ROI from purchasing my offerings?
This palatable lament has been expressed by entrepreneurs and salespeople since time immemorial, but perhaps never so consistently and discouragingly as in this "Buyer Power" Internet Era of ours.
Yes, no matter what product or service we are selling these days, it is quite likely being received in the market by some frustrating combination of apathy, distraction, and a “commoditized” pricing pressure response.
As I have written before, statistics show that this phenomenon is accelerating and for sellers becoming even more vexing because - quite simply - buyers are just spending so much time and energy on their mobile phones to pay attention to anything else!
The result - especially for higher-priced offerings - is buyers not having the attention span to "Stay with Us" through a Problem Definition, Solution Scoping, and Work Proposal as is typical and necessary in a complex sales process.
So, in spite of the speed of communication being quicker than ever, paradoxically decision-making timelines are stretched and even more frustratingly, buyers are giving sellers “More of that Maddening Thing” than ever before: Radio Silence.
Radio Silence, or Buyer Non-Response has driven even the mentally toughest of us to a dark, philosophical place from which the only way out is by being far stronger and more committed to the value of our products and services then we are empathetic to the trials, tribulations, and competing commitments (of time and energy and everything else) of our buyers.
Yes, in the infamous words of David Mamet’s Glengarry Glen Ross’ character Ricky Roma, anyone that has “Spent a Day in their Life” can attest that only through this kind of mental toughness can we truly “Breakthrough” and get our message Heard and Bought.
Now, a bit more idealistically, this mental toughness need has another key dimension: Getting Fully Comfortable with Full Transparency.
Buyers - with quick swipes of their thumbs and clicks of their mouses - can find out just about everything about us and the value, real and perceived, that our customers have gotten/are getting from our offerings.
They can find out directly - and painfully - from the very many product and seller Rating Sites and indirectly but as powerfully via the quantity and quality of traffic and interest that our websites and social media postings receive and garner.
And when the reviews are bad and web traffic and social media non-existent?
Well, as opposed to cursing to the Internet Gods about the unfairness of it all, the Effective Executive instead takes these on as both challenges and as Charges to Keep.
A challenge to get one's happy clients to digitally share their experiences.
And a challenge to deliver and develop value-added Thought Leadership Content (No more sales schmaltz!) that shows (not tells!) our unique value-add.
And a Charge to Keep because if we can't get happy customers to talk about us or if we can’t share ideas of value to our target audience, well then it is time to roll up our sleeves and to work harder and smarter so we can and do.
And as we do this, we will develop a conviction so deep that no amount of distraction and/or apathy can shake or stand against it.
And then that palatable lament of "Why Aren't They Buying" will turn to that wonderful spirit and sense of possibility when the sale is made and the deal done.
If you're looking for funding and/or to successfully grow your business, a little known secret is to find and leverage Advisors.
So, who or what are Advisors? Advisors are successful people that you respect and that agree to help your company. Advisors are generally successful and/or retired executives, business owners, service providers, professors, or others that could help your business.
Advisors generally will not cost you any money (you don't pay them), although I do recommend giving them stock options to incentivize them to contribute as much as possible.
Getting Advisors is not a requirement for raising money, but they have multiple benefits as follows:
1. Practice: if you can't successfully pitch an advisor to invest time in your business, then you're not going to successfully pitch anyone to invest money in your business. So, practice your pitch on prospective advisors first, and use that practice to perfect it.
2. Connections to capital: as successful individuals, advisors often have the ability to invest directly in your company; and/or they tend to have large, high quality networks of individuals they can introduce you to.
3. Credibility: having quality advisors gives your company instant credibility in the eyes of lenders and investors. For example, if you started a new hockey stick company, having Wayne Gretzky as an advisor would certainly give you great credibility (and connections). But even having much smaller names than Wayne Gretzky as advisors can build enormous credibility.
4. Operational success: In an interview I did with Dr. Basil Peters (a wonderfully successful entrepreneur, angel investor and VC), Dr. Peters said that mentors and advisors are an entrepreneur's "single most controllable success factor." Having Advisors with whom you can discuss key business matters as you grow your venture will help ensure you make the right decisions, particularly if they have encountered and dealt with the same challenges already in their careers.
I have seen these four benefits first-hand for my own companies and for companies that we've helped build their own boards. Click here if you'd like to see the list and bios of Growthink's Board of Advisors.
So, how do you build your Board of Advisors?
The steps are fairly simple:
1. Create a list of people you would like to be on your Board
2. Contact and meet with them
3. Secure the best Advisors you meet with
The final step is to hold formal and informal meetings with your Board members to leverage them -- to get them to fund your company or introduce you to other funding sources; to answer key challenges that you are facing, etc.
I must admit that years ago I wasn't thrilled about investing the time to go through the steps of creating a Board of Advisors. But I can assure you; those hours spent have yielded an enormous return on investment. In fact, I should have developed my Board much sooner than I did.
So, go out there and start building your Board of Advisors today. And start reaping the enormous benefits.
Suggested Resource: Want advisors? Want funding for your business? Then check out our Truth About Funding program to learn how you can gain advisors and access the 41 sources of funding available to entrepreneurs like you. Click here to learn more.
"It was the best of times, it was the worst of times…it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way.”
There is no better imagery of what it is like to compete in modern business than this famous opening paragraph from Charles Dickens' The Tale of Two Cities.
On the one hand, it truly is the best of times - never has it been so easy to market to and service a global clientele, and to leverage Free and Open Source technologies, and intelligence to design and deliver best of class products and services and thereby level the playing field with far bigger competitors.
And it is the worst of times, as never have customers been as informed with and empowered by “Compare and Contrast” buying options to almost any offering we as business sellers might conjure up.
The result too often is a “Race to the Bottom” on pricing, and perhaps more discouragingly, an increasingly “transactional” business culture and a devaluing of long-term relationships.
For many types of businesses - electronics retailers, travel agencies, and book stores to name a few - these “Worst of Times” dynamics have proven too great to overcome, and the right economic choice has been to abandon these pursuits as they are highly unlikely to ever again yield positive ROI.
Most of us, however, in so many aspects of our strategies and tactics dance daily on this “Go/No Go” Edge of the Business Knife.
Marketing and sales strategies like Paid Search, Direct Mail, Telemarketing, operational strategies like Leasing Office Space, Hiring Employees, and customer service strategies like Live Support and Dedicated Account Managers just may no longer be feasible for our business case.
And to the degree we stay with these strategies for too long - out of routine or just because we can't come up with anything new or better to do - we run the significant risk of trapping ourselves in high cost, inefficient structures that's sooner rather than later will inevitably meet their digital demise.
So how does the Effective Executive manage and decide in this environment?
To focus as the great Peter Drucker guides us on "Opportunities not Problems" yes, but to also not be Pollyanna nor delusional that we are in any way immune and protected from the severe competitive pressures of our Internet Business World?
Well, a good place to start is to take as our motto the the unofficial meaning of the acronym for the National Football League (NFL) when it comes to its players (average tenure 3.3 Years) and its coaches (average tenure 3.2 years).
Not For Long.
Yes, I think what the most successful, long term businesses of our digital age - Google, Amazon, Apple, Facebook - demonstrate that no matter how big, influential, and currently profitable a company maybe today, essential to their strategic sense and cultural ethos must be Innovation and Re-Invention above all else.
Now, in these “nimbleness” dimensions smaller companies should have a decided advantage over these multi-tens of thousands of people, cumbersome and bureaucratic organizations.
But unfortunately, my experience from working with dozens of them has too often been the opposite.
Whether because of family business dynamics, lack of technological know-how, too much work expended working “In” versus “On” the business causing atrophied strategic sensibilities, when it comes to innovation, small and mid-sized businesses way too often are like the proverbial deer in the face of the oncoming digital train.
Stuck. Frozen. Petrified.
And about to be run over and killed.
It doesn't - and shouldn't - have to be this way, as building good innovation momentum really starts with just some small acts and decisions.
Like letting go of an “institutionalized” employee - one resistant to change and growth (And yes, even if they are a family member).
Or giving up on a once tried and true marketing strategy whose time has just passed (Like the aforementioned paid search, telemarketing, etc.).
Or being honest with ourselves and looking at our product and service offerings as our customers might see them: undifferentiated, middling in value, anachronistic.
And my favorite, accepting that our Business Guts aren't really built for the digital age, and that we need to trust them less and the numbers more when it comes to deciding the right strategies and tactics to pursue.
In some ways it doesn't matter what our innovation decisions and actions are only that we develop the muscle of making and taking them quickly and often.
And then measuring - not guessing - which are working, which are not, adjusting as appropriate, and rinsing and repeating.
Do this for just a month or two - or hire an advisor to help you - and watch that Winter of your Business Despair turn magically to the Spring of its Hope.
When most entrepreneurs start out and realized they need funding, they are typically presented with three options.
The first is debt financing, which is typically in the form of a loan from a bank.
The other two funding options are typically in the form of equity, and they are 1) equity from individual or "angel" investors and 2) equity from venture capitalists.
Importantly, when considering these two sources of funding it is important to understand that most venture capitalists will not invest in companies that have not achieved "proof of concept" (which generally means a working prototype and/or revenues). Also, venture capitalists generally only invest in companies that have the potential to be valued at over $100 million within five years.
These criteria make venture capital inaccessible to most entrepreneurs. Furthermore, angel funding is often a better option since it is much easier to attain.
Consider these statistics:
So while venture capitalists write much larger checks, 15 times more entrepreneurs raise funding from angels.
So why do angel investors fund entrepreneurs? The common answer is that they hope to get a solid return on their investment. Obviously, investing at the earliest stages for a company that eventually goes big can earn the investor 100X their money back or more.
However, there are three lesser known, but equally important reasons, why angel investors fund entrepreneurs:
1. They know, like and trust the entrepreneur. Like with friends and family investments, sometimes angels know and trust the entrepreneurs and want to help them succeed.
2. They feel they can add real value. Many angels have lots of relevant experience that can help the companies they fund, from experience hiring staff to connections with key potential customers or suppliers. If angels can see their involvement adding a lot of value to the company, they might be very interested in investing.
3. Sometimes the angel wants or likes the action. Simply put, angel investing is exciting. It is generally a higher risk/higher reward version of the public stock markets requiring a more entrepreneurial analysis which is highly intriguing. This is particularly the case when the angel investor is a retired entrepreneur or executive.
So, if you are an entrepreneur seeking funding, keep these motivations in mind when you identify, approach and speak with angels.
Because understanding them is often the difference between whether you will raise money or not. Finding angel investors is also easy if you know where to look.
According to statistics from BizBuySell, less than 1 out of 5 of businesses marketed for sale are able to find a buyer and to consummate a successful transaction.
Even this depressing statistic vastly under-estimates how few companies are able to attain a successful exit, as the great majority of the over 6 million U.S. business owners are never able to even consider listing their companies for sale.
That’s a lot of blood, sweat, and tears expended on work and businesses that yield comparatively very little.
Even more viscerally, working hard and long on a business that doesn't get to an exit is, far more often than not, a profound form of losing.
And losing sucks.
Now, there are always reasons and excuses as to why better and faster progress is not made: Cheap, overseas competition, difficulty in attracting and retaining talent, taxes, regulations, and perhaps my favorite the lament that one's struggles are caused by customers that don't “get” how awesome our products and services really are.
These reasons and excuses are just that. For every one of them, there are infinitely more possibilities and opportunities that with just a little refocusing of effort and action can turn declining or flat-lining business vectors into solid and sustainable growth trajectories.
Here are three of them:
1. Always Ask This One Question. The great Charlie Munger, Warren Buffet's partner at Berkshire Hathaway for over 50 years and one of the most successful investors of all time, is famous for asking his managers this question when it comes to important operational decisions: "What is the Low Cost, High Quality choice?"
What I love about this question is that no matter the business process - marketing, sales, operational, financial - it forces us to not to make the classic (and lazy!) false choice between cost and quality: we can have and deliver both.
2. Start at the End. Growthink Co-founder Dave Lavinsky’s Small Business and Entrepreneurship best-seller Start at the End should be required reading for any and all executives truly interested in building their companies to a successful exit.
In it, Dave goes into great detail as to the effective practice of business goal-setting far out in the future, and then how to work backward to today’s most important projects, tasks and to-do's.
3. Trust Our Guts Less and the Numbers More. Pioneering work by Nobel Laureate Daniel Kahneman has demonstrated that in almost all business arenas - hiring, marketing initiatives, sales teams, customer satisfaction, financial performance – almost always it is the cold, hard numbers that are right and our warm and fuzzy guts that are wrong.
This has always been true, but now for the first time we can protect ourselves from our guts, utilizing Predictive Analytics (automatically making sense and order of our Big Data world) and Business Intelligence Dashboards (automatically giving us a "Quantified Self" snapshot of where we stand in real time against our goals and what to do about it).
It is simple: Be numbers-driven, define as precisely as possible our long-term objectives, and at every turn make the lower cost, higher-quality choice.
Build these muscles and you will avoid becoming unfortunate destiny of the vast majority of your business peers…
There are three main benefits I typically derive from outsourcing:
1. Cost savings. I'm often able to pay less for jobs I outsource, particularly if I outsource them to people in lower cost-of-living states or countries.
2. Reduce overhead. Usually I outsource projects that are not full-time or that I am able to easily stop if they aren't working out as planned. This reduces my overhead (and allows me to scale down as needed) since unlike a full-time employee, the outsourced people are not a fixed expense.
3. Supplemental work at night-time hours. When you outsource overseas, it often provides great timing of workflow. For instance, in one company I ran, I would create tasks during the day, give them to my outsourced team in India, and they would be done by the time I arrived in the office the next morning.
However, for outsourcing to work, you need to find the most qualified people to which you outsource.
The key to this is to start by getting the largest pool of qualified outsourced providers to apply for the project you need accomplished. Because you want to have as many people as possible to choose from.
Even if you only hire one, you can go back and contact the same pool of talent for future projects. Consider applicants as being in your "rolodex" of people to call.
To help you do this well, here are some tips to consider when finding and judging outsourced people to complete your projects.
Choose Your Outsourcing Platform
There are many sites in which you can find outsourced providers for the tasks you need done. Among many others, these include Craigslist, ODesk.com, Guru.com, Elance.com and 99designs. Some of these sites focus on certain types of outsourced projects like technology and design, while others allow you to find people for all types of tasks.
The process of posting a project is very similar on each of these sites, but there are also minor differences to get acquainted with as you go -- worry about those later and follow these basic steps.
Create a Clear Project Title
Include the work to be done, on what, and in what industry. For example, "Help Making Ebook" could mean anything from research to writing to editing to cover design. Compare that to "Writing 10,000 Word Real Estate Ebook." The latter will be more likely to catch the eye of writers and providers with real estate knowledge.
Create a Clear Project Description
This sounds simple enough, but you should try to answer as many possible questions as you can, which means addressing certain areas, like:
Upload samples of what you need
You can write 5 paragraphs trying to explain the final product, or you can show them something similar you have done before (or someone else's to model yours after).
Most sites will allow you to upload files to show them what they'll be working with or making. You can also insert links in the project description to files, audios, or videos showing or explaining things more vividly.
Choose the time period for bidding
You might be given options like 3 days, 5 days, 7 days, 15 days, or 30 days to accept bids. I would lean towards giving a longer time period, unless the urgency of your project means that you don't have as much time to wait.
But basically, the more time that providers have to find and respond to your project, the more qualified applicants you'll have to choose from.
Also, some of the best providers are also the busiest, so by giving a longer time frame to respond you are more likely to catch them when they're available.
This is not an exhaustive list, but covers the most important elements of a good project posting-one that will put you in a position of strength and cut down your odds of a bad experience. Cover these bases and you'll have more people applying than you can sort through.
Which then leads to the final phase: judging your applicants. In judging which applicant(s) to choose for your project, consider:
1) How they responded to your project request: were they articulate? Did their comments and/or questions make sense?
2) Their portfolio: do they have a website which shows their portfolio of work that you can judge? If so, take a close look.
3) Their ratings. On most of the outsourcing sites listed above, past clients will rate the outsourced person's work. I never use someone who hasn't completed at least 20 projects and has a rating of 4 stars or above.
Follow this advice and you can find the right outsourcers to help you grow your business and profits.
Suggested Resource: If you don't outsource, you can't compete. The math is simple...if your competitors are outsourcing and only pay $X to complete a task, and you pay $3X, $5X or $10X, your competitors will eat your lunch. You simply must outsource to stay competitive. Outsource the right way using Growthink's Outsourcing Formula. Learn more by clicking here.
In a recent post, I talked about what businesspeople can learn from the world of sports as to leveraging data and metrics to improve decision-making and get a leg up on the competition.
The discussion that followed piqued that age-old question always asked by Sport-Crazy Businesspeople: How much from can we really learn and put to use in our businesses the various lessons and principles from sports and games?
Usually this question is answered at the “meta” level - with somewhat clichéd bromides like the importance of hard work, of practice making perfect, and of viewing all adversities as learning moments.
For sure, these are powerful and important lessons, but I think the question more interestingly can be tackled on a Sport-by-Sport basis, as in what are the best business lessons to be gleaned from the games of soccer, or from football, or golf or tennis?
And relatedly, how do these various sports teach us different lessons?
Let's start out with what I would bucket the "Win by any Means Necessary Sports."
Drawing from personal experience and great loves for these games I would put soccer, football, basketball, and baseball into this category.
In these sports, yes all of the inspirational principles of intensity, teamwork, dedication, and relentless practice certainly apply, but are also in them rarely is a second’s hesitation given to actions that in most other domains would be considered highly unethical.
Like pleading to the umpire that you are safe when you know that you are out. Or claiming to have caught a ball you have not. Or perhaps most disturbingly to the American sentiment, “Flopping” or faking a foul as is so commonly done in basketball and soccer.
Now so let's compare this mindset with that found in games like tennis and golf.
In tournament golf, the vast majority of players would never dream of bending the game’s rules to their advantage and in the rare circumstances where a player is found to have done so, their reputation is badly tarnished.
Similarly, in tennis, it is considered a matter of honor to give one’s opponent the benefit of the doubt on close line’s calls, and players that do not do so are branded unkindly.
The point is not to claim that golfers and tennis players are ethically “superior,” but rather to note that many things considered well within the spirit of the rules in some domains are viewed in others as dastardly to the extreme.
A great example of this is the Deflategate football controversy with the New England Patriots and their star quarterback Tom Brady.
For many non-Patriots fans, it is very easy to get up on one’s High Horse and virulently condemn the Patriots' admitted philosophy of pushing the competitive envelope as absolutely far as possible.
Yes, just as easily the Patriots’ win-by-any-means necessary can be defended within the general construct of the game of football, which is that anything and everything goes, unless and until the referee, umpire or official says otherwise.
And oh yes, many times in these sports it is considered excellent strategy to break the rules, like as in with holding a wide-open receiver or fouling a streaking striker because it is the highest Expected Value Choice to do so.
In contrast, for anyone who has played golf even somewhat competitively such a "practical” mindset to purposely break the rules would be anathema.
Again, this does not mean golfers are more fundamentally ethical, only that the nature and ethos of their respective game is just...different.
And this different nature and ethos reality ports very clearly to business decision-making and competition, as well.
Yes, depending the industry/market you compete in - Real Estate, Retail, Consumer Products, Professional Services, etc. - the ground rules and the boundaries of what is and is not considered acceptable, fair and my favorite, effective - is just different.
So the firm advice for those executives that wish to maximize their chance of victory is to yes remember of course that Fundamental Values no matter the field of endeavor always apply, but…
…to also take into firm account the competitive ethos of one's particular industry and market condition and structure, and to yes then strive to win by Any Means Necessary within it.
And as you do this maybe someday your organization will win Four Super Bowls, or a Closetful of Green Jackets, but highly unlikely will you do both.
If you were raising funding 25 years ago, you probably called prospective investors on the phone and sent them your business plan via fax or overnight delivery.
As you can imagine, things are very different today. And email is the number one way to communicate with prospective investors, particularly professional investors like venture capitalist.
The challenge, as you can imagine, is getting their attention. As most venture capitalists receive tons and tons of unsolicited email each day. So, the key is having a great subject line on your email to get them to open it.
Before giving you some subject lines that do work, let me tell you ones that don't. Subject lines such as "Unique Investment Opportunity," "Please Invest in our company," and "Great Investment Opportunity" don't catch investors' attention and turn them off.
So, don't use these. Here are some you can use:
1. Your Involvement in XYZ Company
Where XYZ company is a company that the investor has funded and which is in your general space. You would start the email with something such as "based on your investment in XYZ company, I think you will be interested in what we are doing..."
2. New in the "XYZ Space"
Where XYZ is the "space" in which you are operating in (e.g., the financial software space). The first line would tie the subject line to what you are doing.
3. Referred by XYZ
Where XYZ is a referral source that knows both you and the investor. This works extremely well, but clearly you must first get the referral.
Because referrals are so powerful, go on LinkedIn and/or other networks to see if you already have someone in your network that can refer you to the investor.
4. Comment on Your Post About XYZ
Where XYZ is a blog post that the investor recently wrote about a subject. In your opening line you explain what you agree with in their post and then tie it to your company.
Importantly, after your subject line and introductory line that ties your company with the subject line, you should NOT tell the investor everything about your company.
Rather, this first email should be a "teaser" email. A "teaser" email is an email that "teases" the investor by giving them a bite-sized amount of compelling information about your company.
The goal of the email is to see if they are interested. If they are, you will follow up with more information (maybe your Executive Summary and/or full business plan) with the goal of getting a face-to-face meeting with the investor.
There are two reasons you shouldn't send your business plan in your initial email. First, you don't want to "over-shop" your deal. Over-shopping is letting too many investors know about your company. If too many investors know about you, the law of numbers states that many investors will pass on investing in you (remember, most investors passed on the opportunity to invest in Google years ago).
So, if an investor isn't even interested in your market space or teaser email, they certainly won't invest in your company. And here's what can happen -- an interested investor asks this investor (the one who isn't interested in your space) if they've heard of your company. That investor says "yes" (since you unwittingly sent them your plan) and that they weren't interested. And then their disinterest dissuades the once interest investor from investing in you.
The second reason you don't want to send out your business plan in your initial email is for confidentiality reasons. You just don't want your business plan out there for everyone to see. Rather, wait until the investor shows that they are at least somewhat interested in your venture before sending it.
So, now that you know that you should start by sending investors a "teaser" email, the question is what to include in the teaser.
Here's the answer: the teaser email should include 5 to 6 bullets about your company and should be very short (200 words or less). The goal, once again is simply to create a general interest in your venture so the investor commits time and energy to learning more about it (by requesting additional documents or setting up a meeting).
Your bullets should describe what space your company is in and credentials that make you uniquely qualified to succeed (e.g., credentials of management team, customers serving already or showing interest, etc.).
To summarize, send investors a teaser email instead of your business plan to start. And realizing that they receive hundreds of emails every day asking for funding, make sure your subject line stands out and seems like you're offering them value.
Last week, I wrote about how to fight through the natural slowdown of the pre-Labor Day period (compounded by the Recent Market Gyrations) and Get Business Done.
With Labor Day behind us, we should now all be in full flight in getting our most important projects and initiatives Fast-Tracked and on course to be completed by the end of the year.
These could include:
• Starting a New Business.
• Pursuing a New Business Initiative within an existing business.
• Developing a Work Plan and Budget for that business initiative and getting that budget funded (either internally or by an outside investor).
• Re-invigorating an existing business' Organization Chart and Design via the development of new job descriptions, reporting structures, new employees and contractors.
• Deciding upon, green lighting, and “Spinning Up” new technologies and SaaS platforms that make our businesses run leaner, faster, and through and on Better Data and Intelligence.
• Buying a competitive or complementary business.
• Selling and exiting from your business (and if this is something you want to get done in 2015, it is time to get going now).
So what do the most Effective Executives do to shake off the summer rust and make more and better things happen than the competition?
They Decide, They Act, and They Course Correct.
They Decide. Now more than ever, the ability to make rapid business decisions and then execute on the project action items and to-dos that flow from them is a fundamental success factor for any modern executive.
Why? Because never before has the information to make great business decisions been as quickly and completely available as it is right now. And if you don't have fast and good enough access to the information you need to make these decisions, then find and invest in one of the amazing array of Business Intelligence Software platforms that will do it for you.
They Act. In Ken Burns' great PBS series "The Roosevelts: An Intimate History," there is a segment on Teddy Roosevelt's (one of the great doers in American history) favorite expressions, "Get Action."
Roosevelt, who wrote more than 150,000 letters in his lifetime (do the math, that is more than 10 per day), was above all else a leader of great decisiveness and action, and it was this quality above all else that made him one of the greatest leaders in American history.
This Will to Act - to make that call, to put out that beta, to find the reasons to do the deal and fight through and fix the reasons not to - is a business muscle that all the greatest leaders and executives have and is one that can only be developed through consistent, vigorous and exhaustive application. Yes, in the great words of Thomas Jefferson if you want to know who you are “Don't ask. Act! Action will delineate and define you.”
They Course Correct. Because of technology never has it been easier to decide, to act, and then rapidly course correct as needed. In this respect, the most effective executives I know have the healthy egos to decide and act, but also the discipline, detachment, and humility to rigorously measure which of their decisions and actions are not working…
...and then rapidly adjust and/or abandon them as the data dictates.
Decide. Act. Course Correct. Rinse and Repeat.
Follow this simple but powerful formula and 2015 can still be the best year of all of our business lives.
If you want to be successful in business, it is crucial to determine when, where, and how to obtain the funds you need. Whether you need $1,000 or $1 million to start or expand your business, if you can't raise this money, you can't build the business you want.
Before You Look For Funding
Before you look for funding, you need to create your business plan. In addition to explaining your business and your strategy for success, your plan must determine how much money you need and for what it will be used.
Also, it's very important for you to understand the timing of the funding. For example, do you need all the funding now (e.g., to build out a location), or can you receive your funding in stages or "tranches."
The amount of funding you seek will effect the source of funding you approach. For example, if you require $250,000 in funding, angel investors are more applicable then venture capitalists. If you need $5 million, the opposite is true.
While I have identified 41 sources of funding for your business, below are the 5 most common.
The 5 Most Common Types of Funding
1. Funding from Personal Savings
Funding from personal savings is the most common type of funding for businesses. The two issues with this type of funding are 1) how much personal savings you have and 2) how much personal savings are you willing to risk.
In many cases, entrepreneurs and business owners prefer OPM, or "other people's money." The four funding sources below are all OPM sources.
2. Debt Financing
Debt financing is a fancy way of saying "loan." In debt financing, the lender (often a bank) gives you funding that you must repay over time with interest.
You must prove to the lender that the likelihood of you paying back the loan is high, and meet any requirements they have (e.g., having collateral in some cases). With debt financing, you do not need to give up equity. However, once again, you will have to pay back the principal and interest.
3. Friends & Family
A big source of funding for entrepreneurs is friends and family. Friends and family members can provide funding in the form of debt (you must pay it back), equity (they get shares in your company), or even a hybrid (e.g., a royalty whereby they get paid back via a percentage of your sales).
Friends and family are a great source of funding since they generally trust you and are easier to convince than strangers. However, there is the risk of losing their money. And you must consider how your relationship with them might suffer if this happens.
4. Angel Investors
Angel Investors are individuals like friends and family members; you just don't know them (yet). At present, there are about 250,000 private angel investors in the United States that fund more than 30,000 small businesses each year.
Most of these angel investors are not members of angel groups. Rather they are business owners, executives and/or other successful individuals that have the means and ability to fund deals that are presented to them and which they find interesting.
Networking is a great way to find these angel investors.
5. Venture Capitalists (VCs)
VC funding is a suitable option for businesses that are beyond the startup period, as well as those who need a larger amount of capital for expansion and increasing market share. Venture capitalists are usually more involved with business management, and they play a significant role in setting milestones, targets, and giving advice on how to ensure greater success.
Venture capitalists invest in companies and businesses they believe are likely to go public or be sold for a massive profit in the future. Specifically, they want to fund companies that have the ability to be valued at $100 million or more within five years. They also go through an expensive and lengthy process of deciding on the best business to invest their money. Hence, the approval process usually takes several months.
As you search for the best funding source for your business, you will discover that some financing options are complicated while others may offer a very small amount.
Choosing an inappropriate type of funding can lead to unfavorable outcomes such as feuds between the lender and business owner, shift of control, waste of resources and other negative consequences.
With this in mind, you should study the benefits and drawbacks of each financing option and select the ideal one that will help you meet your business goals. Because with the right source(s) of money, the sky is the limit for your business.