Several years ago, a very interesting experiment was conducted.
In the off-season, a basketball team was split into 3 groups for a month. The first group practiced shooting free throws for 30 minutes per day. The second group didn't practice shooting free throws at all. The third group also didn't physically practice shooting free throws at all, but this group spent 5 minutes per day visualizing themselves shooting free throws and getting them in the basket.
The results: The first group improved their free throw shooting by 24%. As one might expect, 30-minutes a day of practice led to improved performance. The second group had a 0% average improvement. Once again, as you would expect, by not practicing, the players didn't improve their performance.
The most interesting result was the third group, who increased their free throw shooting by 23%. This group improved performance by virtually the same amount as group one. And they didn't even take a single practice shot. And, they only spent 16% of the time (5 minutes visualizing vs. group one's 30 minutes of actual practice) trying to improve.
Now, I'm not saying that people should never physically practice things to get better at them. No, real practice is essential to success. But, when you add visualization, your success can go through the roof.
Visualizing yourself achieving success is also known as "mental rehearsal." And mental rehearsal has been proven to improve performance in a variety of situations from job interviews to presentations to sales calls to athletic performance.
And the big one I want to focus on is presentations. Contrary to what most entrepreneurs want to believe (most want to believe they can simply send an email to an investor and receive a funding check in return), no one is going to invest in your company without first meeting with you.
And when you meet with them, you want to go through a well thought-out and delivered presentation that explains what your company is, why it's exciting, and why they should invest now.
To succeed in this endeavor, the entrepreneur must first create a compelling slide presentation. Then, they must practice giving the presentation over and over to increase their fluency and comfort giving the presentation.
And finally, as we learned with the free throw shooting experiment, the entrepreneur must mentally rehearse the presentation. They must visualize themselves giving the presentation, and having the investors nodding in agreement, and ending the meeting with the desired outcome (e.g., the investor writing a check to you).
The mind works in funny ways. It seems odd that visualizing yourself successfully giving a presentation would make a difference. But it definitely does. And it is often the difference between an entrepreneur receiving a big check that funds their business, and going home empty-handed.
Recently, the Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted into law.
One type of consumer that the Act tries to protect is angel investors. Specifically, the Act modified the qualifications for being an accredited investor.
Previously, an accredited investor was defined as an individual with at least $1 million in assets, $200,000 in personal annual income or $300,000 in joint-spousal annual income. The Act modified the asset calculation to exclude the value of the individual's home. As a result, many angel investors who were previously categorized as accredited are no longer accredited.
However, this is not the end of the world to entrepreneurs seeking angel investments. Regulation D still allows up to 35 non-accredited investors to participate in a private placement. As a result, you can still receive funding from some angel investors who are no longer accredited due to the revisions stipulated in the Dodd-Frank Act.
If you are seeking to raise funding from angel investors and/or through a private placement, read this article which details the Regulation D exemptions you need to be aware of.
Most of you came to this blog post from an email I sent you.
The email read as follows:
Subject Line: The Most Important Email
You'll Ever Read
I have an ultra-important message
to share with you.
Visit my blog to read it.
PS. It will only take about 3 minutes to read this.
And you'll benefit for a lifetime.
Visit my blog to read it.
So why is this the most important email (or blog post) you'll ever read?
Because it gives you a critical lesson in communications that is absolutely essential to your success as an entrepreneur.
The lesson is this: 1) be as simple/clear/concise as possible in all important communications, and 2) sell ONE thing at a time.
Let me explain.
1) Be as simple/clear/concise as possible
My email message was extremely concise. It said that I have an ultra-important message
to share with you and that you should visit my blog to find out what it is.
2) Sell ONE thing at a time
My goal in the email was to "sell the click" or convince you simply to click on the link. I wasn't trying to get you to do anything else.
The results: Because I was clear and sold just one thing, you clicked on the link.
So let's apply these lessons to raising funding for your business.
The other day, one of my Crowdfunding clients sent me the email they were about to send to their friends to get them to donate.
The email was very long and gave tons of details about their company and why their friends should donate.
THIS WAS THE TOTALLY WRONG APPROACH!
To begin, the story about the nature of the company should have been no more than ONE LINE long. If you can't already sum up your venture in one line, than stop everything and figure out how to do it. Importantly, that one line doesn't have to provide every detail about what's unique about your business. Rather, it just has to give people the essence of your business.
Secondly, the goal of the email should have simply been to get their friends to click on a link to learn more. To go to a page with a video and a nicely laid out story on why they should donate.
The point is that you can't get many people to donate just from the email, but you can get many people to click. And then once they click, you give them the information they need to donate.
The same is true with angel investors and venture capitalists. No venture capitalist has EVER invested based on an email they received. So why would you ever send an email with the hopes that they will invest?
Rather, the initial email you send to investors should just be to gauge their interest. That's ALL you're selling in the email. Say here's what we're doing and include 5 interesting bullets about your company. And then say, "would you like to learn more?"
That's it. Sell one thing, which is "would you like to learn more?"
And then, if they say "yes," you're goal will be to sell them on investing the time to meet with you.
And then you're selling them on letting you present to the other VCs in their firm.
And then you're selling them on giving you their money with the best investment terms. And so on.
I'm very lucky. My son is a fifth grader. So I have built-in tester. If I tell him a message and he can't repeat it back to me as clearly as I told it to him, then my message is flawed.
And if I ask him to do a complex task and he does it wrong, it's because I tried to sell too many things at once, rather than selling him on doing just the first step.
Many of us have heard the acronym KISS, standing for "Keep It Simple, Stupid." Simplicity in communications is essential. While some people think complexity makes them sound smart, it confuses their messages so the recipients of those messages don't take the desired actions.
In fact, I rather sound like a moron, but convince others to do what I need them to do, than appear as a genius, but a genius that fails to accomplish his goals.
So to reiterate, if you want to succeed as an entrepreneur, you must communicate clearly and simply, and sell just one thing at a time. This is key when selling to everyone from investors, to customers, to partners, to your employees.
Three resources for you:
Readability Score: this cool free tool allows you to see how easy your text is to read. You simply copy and paste your text into the box and click Submit.
FYI, according to this tool, my email was written at just a 2nd grade level. Meaning that even a 2nd grader would have understood exactly what I wanted them to do. This blog post was written at a 6.5 grade level (I have to work on getting that down so it's even easier to read my posts (the New York Times is written at a 6th grade level)).
Truth About Funding: This guide shows you exactly how to raise all the money you need. Importantly, it walks you through 3 different approaches and exercises to create a hard-hitting concise pitch for your company.
Crowdfunding Formula: This program shows you precisely how to raise money from Crowdfunding, the newest and probably the easiest way to raise money for your business. Crowdfunding allows you to leverage the communications techniques explained above.
I just learned about an interesting new website called My Dunk Tank.
The site helps you raise money by asking your supporters to create dares for you and vote with their donations.
Here's how it works:
1. You make a list of dares you're willing to do
2. Your friends vote for their favorite dare by making a gift in your name to the organization you are supporting
3. You do the dare that gets the most votes
So far, people have done some pretty interesting dares from jogging naked to eating worms to kissing a pig.
One of the bigger winners so far was Beth and Katie Cooke who raised $2,913 for The Spina Bifida Resource Network via the dare of "wearing a full head of cornrows in our hair for 2 weeks."
To date, it appears that all the fundraising has been for non-profits like the National MS Society, the Susan G. Komen Race for the Cure, and Talk About Curing Autism.
And the amount of the funding is relatively low, with most funding amounts ranging from $500 to $2,000.
So, if you have a non-profit organization looking for $500 to $2,000, you could certainly try MyDunkTank. But for the vast majority of you, this amount of funding is not going to really help.
However the bigger lesson here might be that dares and stunts can give any type of venture lots of attention.
Consider newspaper man Henri Desgrange. In 1903, his French newspaper was suffering from poor circulation. So, they developed a stunt to promote a new newspaper service route. That stunt garnered national attention and eventually turned into the Tour de France.
So, what kind of stunts can you do for your business to gain attention? I don't think silly stunts like kissing a pig or shaving your head are the answer. They're too short lived. Can you think bigger?
And specifically, is there anything that you can do that's interesting and related to your venture? One of my favorite example is when the manufacturer of Blendtec blenders made a video showing that it could blend an iPhone. That video has gotten over 8.8 MILLION views to date on YouTube (you can watch it here).
The good news is that with brand new funding sources like Crowdfunding, even a startup with no revenues can raise hundreds of thousands of dollars if they can generate enough attention.
So get your creative juices flowing, come up with ideas to generate buzz, and you can parlay that into investors, customers, partners and more.
Emeril Lagasse is no doubt one of the most famous and successful chefs of all time.
In fact, Emeril's media, products and restaurants generate an estimated $150 million in annual revenues. Not bad.
One of the reasons for Emeril's success is his personality. And in particular, his ability to make cooking exciting. Particularly when he shouts his catchphrases including "Kick it up a notch!" and "BAM!"
I want to focus specifically on Emeril's "BAM!" and its implications.
Emeril say "BAM!" only at a specific time. He says it when he adds a pinch of a certain ingredient that will make a good recipe extraordinary. Also, like other chefs, Emeril spends time "plating" or focusing on the appearance of the dish.
So why am I telling you this?
Because Emeril gives us a great lesson in developing business plans, particularly if we hope to present our business plans to investors and/or lenders.
To begin, your business plan must have a "BAM!" factor. The "BAM!" is what makes your plan extraordinary or worth reading. I believe that the biggest "BAM!" factor is your list of success factors that MUST go on the first page of your business plan.
Specifically your success factors must detail, ideally in bulleted form so it's simple to digest, why you are uniquely qualified to succeed.
Most business plans neglect this, and most entrepreneurs think that the quality of their idea is more important than this. Not true. Your ability to execute on the idea is of paramount importance.
In addition to including your "BAM!" factor, like Emeril, you need to spend time "plating" or making sure your business plan has a great appearance. Since if it doesn't, investors won't read it.
Making your business plan graphical appealing, with pictures, logos and the right fonts and spacing helps. But even more important is laying the "story" of your business out in a format that constantly compels the reader to want to read and learn more. Rather than bombarding them with every detail about your venture, you lead them down a path.
You succinctly tell them about what your venture is all about. You tell them why you are uniquely qualified to succeed. You show them the market need. And customer wants. And your marketing plan. Etc.
Few people, including investors and lenders looking for deals, really want to sit down and read your business plan. Those business plans that are inviting, and have the "BAM!" factor are the ones that investors pick up and can't put down. And those are the ones they fund. So make sure yours is like that too.
Watch this video for tips and shortcuts for completing your business plan.
When Catherine Lanigan was a teenager, she earned a scholarship to attend college.
While in college, she took a writing course given by a traveling Harvard professor.
During the class, a major assignment was for her to write a short creative story.
Catherine earned an 'F' on the story. Not only was earning an 'F' alarming to her, but if she failed the class, she risked losing her scholarship.
So, she went to speak to the professor. When asked why she received the failing grade, the professor replied, "Frankly, Ms. Lanigan, your writing stinks."
However, the traveling Harvard professor did give Catherine a chance to pass the course. He told her that if she stopped writing and changed her major, that he would allow her to pass the course.
So that's what she did.
Fourteen years later, Catherine Lanigan was hanging around the set of a movie and speaking to screenwriters. When asked why she was there, she told one of the screenwriters that when she was younger, she had wanted to be a writer.
Catherine proceeded to tell the story of the traveling Harvard professor. The story really intrigued the screenwriter, who asked her to write something so he could judge it for himself.
Well, the book that Catherine Lanigan wrote for the screenwriter was called Romancing the Stone. It not only became an extremely successful book, but it was later made into a major motion picture. And it didn't stop there; Catherine was asked to write the sequel, Jewel of the Nile.
The point of this story is that you can't give up in spite of any criticisms you might receive or failure you encounter. In fact, in business, most new things you try fail. It's tweaking those things and trying a second time, or third time, with more and better information, that allows you to be successful.
And realize that most of those criticisms (you're not smart enough, you're not tall enough, you're not creative enough, etc.) you've received throughout your life were dead wrong! We must all overcome them. Gain our levels of confidence. And achieve everything that we want. Because if we don't fear failure, really believe in ourselves, and work hard, each of us can achieve anything we want.
Feel free to use the little train who thought he could as your inspiration. That little train succeeded simply because he thought he could; because he was able to convince his mind that he could and would achieve success. Even though everyone else told him he couldn't. And even though he might have failed before.
If doubt ever creeps in your head, think of the little train, and say "I think I can" "I think I can" "I think I can" over and over in your mind, and then "I know I can" "I know I can" "I know I can." Because if you do this, you can accomplish anything!
(I know what I'm saying may seem corny. But I rather achieve success and be accused of being the corny guy sitting in his office repeating "I think I can," versus not achieving the success I desire.)
The 4-minute video below gives an important lesson about concept versus reality and how to convince investors to fund your company.
Comments? Thoughts? Questions? Do you think I've lost my mind? Please post them below.
We've all hear the nursery song "Three Blind Mice."
It goes like this:
Three blind mice,
Three blind mice
See how they run,
See how they run!
They all ran after
The farmer's wife,
She cut off their tails
With a carving knife
Did you ever see
Such a sight in your life
As three blind mice?
But have you heard the "more educated" version called "A Trio of Sightless Rodents." It goes like this:
A trio of sightless rodents,
A trio of sightless rodents
Observe how they perambulate
Observe how they perambulate;
They all pursued the agriculturalist's spouse,
Who severed their caudal appendages with a carving utensil
Have you previously observed such a phenomenon in your existence
As a trio of sightless rodents?
Both versions say the same thing.
And I guess if you wanted to impress someone, you'd tell them the "more educated" version of the tale.
But, most likely, listeners would tune out the "more educated" version.
Why? Because it's much harder to follow and makes them think way too much.
Conversely, the simple "Three Blind Mice" version is easier to follow.
The point is this -- if you can't communicate simply, clearly and concisely, people won't understand what you're talking about. They are not going to invest the time and mental brainpower to figure out what you mean.
And if you are communicating to get someone to take action, be it to buy your product or invest in your company, if you lack clarity, you will virtually always lose the sale.
Most business plans lack this critical clarity. The entrepreneur makes the business far too complex. And as a result, investors don't understand what they are doing, and don't invest in the business.
Here's a test to see if you're communicating your business' value proposition properly. Give someone one minute to read the first paragraphs of your business plan. Then, a minute later, have them repeat back to you the business' value proposition (without looking at the document). If their version is good, you've done a good job concisely explaining your business. If not, then it's back to the drawing board.
Even better, have the first person state the value proposition to a second person, and then have the second person repeat it back to you. A clear, compelling message will survive this grapevine.
When I created Growthink's Ultimate Business Plan Template, I focused on making every section of the business plan simple, clear and concise. So that investors can quickly understand all the key points about your business. And so they will invest. Because certainly, investors will not invest in what they don't understand.
So, make sure all of your verbal and written communications, starting with your business plan, are simple, clear and concise so everyone "gets" it and takes the actions you desire.
Today, like I do every Monday, I bought the company lunch.
A lot of productivity experts advise against lunch meetings as participants focus too much on the food, and not enough on the discussion.
I buy that argument. But I also think that everyone appreciates it when the company springs for lunch, and we often have high-quality creative discussions.
Today we opted for Chinese food. Last time we had Chinese was about two years ago. I like to eat healthy, and I guess the others have to deal with that guideline too when it comes to Monday lunches.
And with Chinese food comes the obligatory fortune cookies.
My take on fortune cookies is this -- they are always fun and interesting to open; but I just don't think they taste very good. But, I always eat them hoping for a better experience than the last time. Today, once again, the cookie tasted decent-at-best and definitely wasn't worth eating. I guess I have trouble throwing away food though.
The one thing that is so interesting about fortune cookies is that people always read their fortune, and they always think about it for a moment.
Today, my fortune was "By listening, one will learn truths. By hearing, one will only learn half truths."
So, my personal lesson for today was to listen more. To really pay attention to those around me and the things that I experience everyday. So I can better help others and better help myself achieve my goals.
And now, by writing this down, I am confident that I will get better at this. And by improving, my life will improve and I will move closer to achieving my goals.
What is fascinating to me is that it takes a note inside a fortune cookie sometimes for people (including myself) to stop what they're doing, read something, and really think about what they have read, what it means to them, and how they can use that information to improve their lives.
So, if you don't mind, I'd like for you to stop for just one second. Take a deep breath. Imagine that you had a fortune cookie in front of you. Crack it open. And read the note inside. And I want you to imagine that the note said this "Tomorrow, you will achieve all of your goals."
Now flip the note over. And you'll see that it says, "But only if you define your goals today."
As today was the first day of August, during our lunch meeting we reviewed our July goals and our July results, and we set our goals for August. I urge you to do the same. Because without defined goals, you can't achieve the results you desire.
Last night I went to a party at a bar in New York City.
The party was organized by a successful businessman that I recently met. He was visiting New York, and put together the event so he could catch up with a lot of his old friends.
I didn't really know anyone at the event which was a little awkward at first. But everyone was real nice, and I soon got to speaking with several of the guests.
And what I learned from speaking to person after person was this -- the quality of the people in the room was incredible. Lots of extremely successful people in all fields such as business, medicine, law, etc.
So, why am I telling you this?
Because you need to be attending events like these.
Why? Because virtually all of the attendees could have been investors in your company. And many of the attendees had significant rolodexes and could introduce you to other potential investors, partners, employees, etc.
The fact is that successful people generally hang out with other successful people. So, you must find at least one successful person and hang out with them as much as possible. Not only will they introduce you to other successful people, but their success will rub off on you. I truly believe in the saying "you will become the average of the five people you hang around with most," so make sure those five people are successful.
I know what many of you are thinking right now as you read this. Sure Dave, it's easy for you to hang out with successful people, but how can I do that; I don't know any really successful people.
My answer is to get Advisors. Find successful people, perhaps local business owners, executives and industry "celebrities." And invite them for a 15-minute conversation over coffee where you get their advice about your company. Many folks are very receptive to these invitations because it strokes their egos.
And if you develop good rapport during the conversation, ask the person to become an Advisor to your company. And once you get them as an Advisor, you have your successful person. They can then spend time with you and introduce you to other successful people.
I'm currently finishing up a new guide teaching entrepreneurs the best ways to raise money. In the guide I spend a whole chapter on how to get Advisors since it's that important.
And finally, I want to comment on the title of this blog post. I say that entrepreneurs need to drink more beer in that they must get out there and hang out with successful people in social settings. If you want to drink wine (or soft drinks) in these settings, that's fine. I just happen to enjoy beer more (and for other beer enthusiasts, last night I drank Sixpoint Sweet Action which I highly recommend (pretty good reviews on Beer Advocate)).
Comments? Thoughts? Do you have similar stories about meeting successful people in social settings? Post your comments below -- I look forward to reading them!