The passing this week of Arnold Palmer at 87, 
and the retirement from broadcasting of Vin Scully at 88, is a moment to reflect on the time, world, and value system these men represented, and on the wisdoms from their careers that can be applied to our modern life and business journeys.
Arnold Palmer and Vin Scully - their names are synonymous with “old school” character and decency.
These were men highly comfortable with who they were and what they represented to their adoring fans.
And this heartfelt character and decency was wonderfully magnified by so many of those fans having their first exposure to them as impressionable youngsters, or as deeply from stories told by their fathers and grandfathers.
Yes, we wanted to see in them these old school qualities, which they embodied to begin with, and the more we found them when we looked, the more developed they became in them.
Is a great business brand any different? When we communicate our “best business self," and as it is positively received, this in turn encourages more of whatever these best qualities happen to be to grow in our business, and so on and so on.
And then by just “keep on keeping on” - as Arnie and Vin did for over 60+ years - the high virtues of consistency, longevity, reliability, and trust are washed over our brand.
Now, with these virtues alone Messrs. Palmer and Scully would be great men.
What made them legends was being insanely great at their chosen fields.
While many only remember Arnold Palmer in his grandfatherly later years, in his prime he was the best golfer in the world, winning four Masters, two British Opens, a US open, and over 90 other professional tournaments.
Well into his 80s Vin Scully still remains universally regarded as the best broadcaster in baseball - uniquely working alone and doing both the play-by-play and "color" game analysis in his perfectly paced and wonderfully melodious story telling way.
Now for the rest of us that fall rings below these world class talent levels, let’s first find and focus upon those areas where our talents are most competitively advantaged and then have faith and confidence in the truism that “hard work beats talent when talent doesn't work hard.”
It goes deeper than this, though.
Beyond character, beyond longevity, beyond talent, the reason why the passing of Arnold Palmer and the retirement of Vin Scully touches so many is because they represent a certain and sometimes sadly seemingly gone for good Mid-Twentieth Century America hopefulness and innocence.
A hopefulness that the future will be even be better than the past.
An innocence that the world and the people in it are at their essence good and well meaning.
These are at the heart of the childhood imaginings we all once had, and that Arnold Palmer and Vin Scully maintained throughout their long and storied lives and careers.
Rest in peace, Mr. Palmer. And rest well, Mr. Scully.
Let’s best honor them with more spring in our steps, cadence in our speech, and hopefulness and innocence in our hearts.
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.
Above all else, business leaders are tasked 
with solving the fundamental challenge of growth.
Growth in the form of increased revenues and profits, of more and better assets, and of more organizational “innovation” capacity and results.
This is extremely challenging work.
The challenge starts at the top, with “revenue regression" - the statistical tendency for most companies to grow as the economy does - just a few percentage points per the average in most developed economies.
Then there is the unrelenting “bottom line” pressure brought on by technology and globalization - the “competitors are everywhere and available to buyers at a click of a button” phenomenon that presses down prices and margins.
And in between lies the leadership challenge of innovation.
How do we "keep up" and "ahead" in all aspects of our business?
With the creativity and efficacy of our marketing and branding, with new product and service development, with an invigorated and inspired company culture?
And oh yes, for smaller businesses how do we do all this in the face of limited capital, of the "hamster wheel" pressure to just live to fight another day?
But while the challenges of growth are everywhere, so are the answers to overcome these challenges everywhere too.
And most of them can be found in one of the buckets of inspiration, information, and collaboration.
Inspiration. Every day in the financial and business news are awesome examples of business leaders “getting it done” - reporting record revenue and profit growth, rolling out new products and services, raising tens of millions of dollars, selling their companies for many multiples of that, and the list goes on.
Our first reaction to hearing of this success should simply be: If they can do it, we can too.
Here is an easy suggestion: Let’s consume a lot less of the gossipy soap opera called political news...
...and a lot more business news: tales of professional success as is featured on CNBC, in the Wall Street Journal, in Fortune, Fast Company, Entrepreneur, and Inc. Magazines, and on countless websites, podcasts and social media postings.
And as we get inspired by it all, we naturally get better and more informed.
You see, while I am proud of my UCLA MBA, a 21st Century MBA gets re-earned each and every business day.
How great is this? Any and every needed growth idea for any business is there for the having if we just take the time to look for it in the places mentioned above.
So with just a bit more inspiration and innovation our results will improve.
But for the kind of growth that gets us featured on CNBC, or on the cover of Inc., for that we need to stir in the magical element of collaboration, so wonderfully defined as "the action of working with someone to produce or create something."
Yes, great collaboration starts with “the action,” the recognition that business is not a spectator sport nor a game of perfect so let’s get our hands dirty and “fail forward” while...
...“Working with someone,” recognizing that no matter our technological progress we are all at our essence hunter-gatherer primates that thrive tribally, with those tribes being of our fellow employees, our customers, vendors, partners, service providers, our community...
And with them, we “produce or create something.”
We market. We sell. We innovate. We bring beautiful things into the world.
We make money where before there was none.
Inspiration. Information. Collaboration.
So many business leaders do these and more and grow and win every day.
We can too.
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.
CCS Insights forecasts that 411 million smart wearable 
devices, worth a staggering $34 billion, will be sold in 2020 (up from 274 million this year).
These wearables include eyewear (97 million predicted to be sold in 2020), hearables (9 million est.), fitness and wellness wristbands (164 million), wearable cameras (25 million), tokens, clip-ons, jewelry, and smart garments (6 million), and smartwatches (110 million).
These devices and their associated technologies and software applications are already transforming industries as diverse as healthcare, telecommunications, entertainment, gaming, and more.
Webinar Invitation: Opportunities in Smart Wearables
You’re invited to listen to a webinar recording, hosted by Growthink co-Founder and Managing Partner Jay Turo, on Friday, September 16th at Noon ET / 9 am PT where a select group of wearable entrepreneurs and investors share how they and their companies are winning in this incredibly dynamic space.
My panelists will include:
On the web conference, our panelists will share:
Recording Link
Please listen to the webinar recording via the link below:
https://attendee.gotowebinar.com/register/7474891639709337090
Look forward to your feedback.
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.
[Click Here to listen to my September Webinar on 
the “7 Keys to Business Plan Success”]
Happy September! For many of us, this week is a turning of the page - from the slower, vacation and family-focused summer months - to the full-on business sprint to the end of the year.
In financial markets, the window between Labor Day and Thanksgiving is often referred to as "Capital-Raising Season," as it is a very active time for companies and investors to connect, to diligence each other, and to do deals.
I call it the "No Excuses" time of year.
Summer is over, the holidays are far away, tax season further, so now is the time to get deals done - growth financings, strategic partnerships, big new customer sales, key new hires you name it - if a mission critical deal is to be done, this is the time of year to do it.
You see, good deal makers get good deals done. Great dealmakers get great deals done fast.
So let’s all set a goal this fall to do twice the number of deals, in half the time, while maintaining and even improving quality. Here's how:
#5. Use the 20% Rule. In a previous post, I described The 20% Rule, whereby improving four key business processes by just 20% each leads to results doubling.
Simply identify four components of your deal-making process - for example 1) marketing-to-lead conversion 2) lead-to-proposal conversion 3) proposal-to-sale conversion and 4) repurchase rate, and then work to improve each by just 20%.
I run through the math here, with the net result of revenue increasing by 2.4X via these “cascading” 20% improvements.
#4. Build a One Month “Micro Plan.” While longer time horizons - 1, 3, 5 years - are powerful and necessary for more “global” business and strategic planning - for many mission critical projects shorter timeframes can be invigorating and catalytic.
For example, let’s look at how to raise capital in one month, a process that is not unusual to stretch out for six months, a year, or longer. To get it done in one month would require:
i. the business plan and all investor presentation materials to be completed in a week to ten days;
ii. a well vetted and relationship-based prospective investor assembled in parallel;
iii. contact with / promotion made to these investors within 7-10 days after completion of the plan;
iv. detailed diligence provided and talked through with those showing interest within an additional 7-10 days; and,
v. respectful yet urgency - driven “closing” done with the most interested prospective parties over just a few days.
Is this an “aspirational” timeline? Sure, but whether or not we actually get it done this fast the act of setting a timeline like this and then working like heck to meet it is in itself transformative.
And you just might surprise yourself and raise money far faster than you thought possible!
#3. Enlist Help. In modern business the old aphorism of “Many Hands Make Little Work” needs to be updated with the caveats that “Many Well Led Hands get High Quality, Important Work Done Fast.”
It is so awesome that modern executives have with just a click of a button access to high quality, on-demand resources of all types: marketing copywriters, graphic and website designers, telemarketing sales help, contract fulfillment and customer service and the list goes on and on...
...for any business process there is quite likely an outsourced provider that can do it better, faster, and cheaper than in-house.
The key is having the know-how to source the right vendors and then leading them such that they seamlessly work together as to “de facto” become in their aggregate part of a full-time, in house team.
Hard to pull off? Well, if you feel this way, then hire an outsourced firm to manage the outsourcers!
This may seem like a Dilbertian Skit, but the reality is that the tools of virtual communication and collaboration are now so good that building a fully outsourced, on demand work model like this often makes far better business sense than the old “all under one roof” W-2 model.
#2. Work Harder. There are actually 168 hours in a week, not 40, and by working both longer hours ourselves along with orchestrating a global team per the above, we can get things done four times as fast as under the old "9 to 5" model.
I like to re-frame working longer hours as a blessing, as the vast majority of people just don't have the opportunity to work hard on challenging and remunerative projects like those of us in the Knowledge Economy.
And oh yeah, in addition to the “it is its own reward” nature of hard work, just plain old outworking the competition is the most tried and true strategy of winning deals in multiple bidder/vendor dynamics.
#1. Recognize that There are No Rules. There are no longer any rules whatsoever as to how long things should take.
Like Amazon making deliveries in 2 hours or less, Uber bringing a driver to your door in a few minutes, and Google giving us detailed answers to the most esoteric and niche questions in just a few milliseconds, the great technologists and innovators among us are constantly resetting the frame as to what fast is.
Let’s bring this “speed sensitivity” to our businesses these next two months.
Identify those areas where incremental (20%!) improvements can have a big cumulative effect, design “micro plans” to make those improvements, get help everywhere and anywhere, work hard, hard, hard, and let go of any pre-conceived notions as to how long things should take.
Do all this and we can rename this “No Excuses” season as the one of “Big Business Breakthroughs” for all of us!
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.
Bottom Line
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.
Last week, I wrote about how any business - no matter 
how "Old School" - can benefit via emulating the strategies of "High Flying" companies in industries like virtual reality, wearables, 3D printing, autonomous driving, and more.
One reader whose opinion I respect wrote back..."Jay, loved the post and agree with the sentiment, but can you make it a bit more actionable? Perhaps offer some specific “high flying” ideas and examples applicable right away to companies in slower growth industries and markets?"
Of course!
Here are four critical business domains - financing, sales, organization design and goal setting where the high-flyers get it right:
Financing. Most companies in high flying industries raise money (and a lot of it!) on an ongoing basis.
Like Uber raising $8.7 billion over 7 years.
Or Airbnb raising $2.3 billion over 8.
Or Dropbox raising $607 million over 9.
They keep raising money because money buys speed. Speed of product development, of brand-building, of customer acquisition, of team-building and talent aggregation.
Now, for how long will they continue to do it?
For as long as they are in business.
Quite simply, investor promotion is a mission-critical process that should be undertaken by every company of ambition on an ongoing and continuous basis.
For smaller, less "glamorous" companies, look at it this way - if you go out and ask for money, you might surprise yourself and raise it. And if you can't, it's a canary in the coal mine - flagging needing to be fixed problems with your strategic model, your management execution, or both.
Sales. Over the past 15+ years, advising hundreds of companies across diverse industries, I have seen a consistent, disturbing trend: The older, more "established" a business is, the less enthusiastic, inspirational, and “Big Deal Effective” is its sales approach and execution.
Yes, any sales team for any business, no matter the industry, would instantly perform a LOT better by just emulating the "Messianic Enthusiasm" of the high flyers.
Well, you may say, if my business, my industry, my product was as exciting as theirs, then I would be more enthusiastic too!
Hogwash!
Enthusiasm, at its heart, is a choice. Let's have our salespeople be as enthusiastic as those at the High Flyers and watch results improve right away.
Organization Design. When it comes to how that "Collection of Humans" that make up how a modern business is organized, long gone and never to return are the days of all a companies' people being W-2 employees working under a common roof.
Beyond a “virtual” workforce, beyond utilizing overseas development partners, best practices around modern organization design include "Scrum-like" reporting structures, all calls being done as video calls, always on chat, in-person meetings conducted standing up, no landline phones, "e-mail free" days of the week, and the complete elimination of office environments altogether.
Of course, not all of these approaches are appropriate for every business, but if your company is not growing then why not try everything and anything so that it does?
This is the high-flying mindset - to never be complacent or "me too," but instead to strive for efficiency and creativity in all aspects of how a company is led and managed.
Goal Setting: High flying companies set big and exciting goals, design bold plans to reach them, and then organizationally work, work, work to make them so.
Compare this with the approach at too many older line businesses. They set goals like “growing 5% next year” or “hiring a new salesperson” or “redesigning the email newsletter.”
Please.
In the famous words of Daniel Burnham - “Make no little plans; they have no magic to stir men's blood.”
Dream a little. Push the growth plan right to that edge of “Hot Air.”
My experience is that we are usually pleasantly surprised both by how close we come to reaching those “stretch” goals, and as importantly how much just going out on a limb a bit builds “elan” and confidence in the entrepreneur and the organization.
Financing, Sales, Organization Design, Planning.
Do like the high flyers in these business domains and soon enough your company will be one of them, too.
The word "crux" is an interesting word. It's a noun that can be defined as: (1) the decisive or most important point at issue, or (2) a particular point of difficulty.
In either case, the word aptly applies to raising funding for your business, because in doing so, most entrepreneurs and business owners encounter difficulties.
I believe the crux to successfully raising money for your business lies initially in understanding that investors are essentially professional risk managers.
Let me explain. Most sources of money, like banks and institutional equity investors (defined as institutions like venture capital firms, private equity firms and corporations that invest), are essentially professional risk managers. That is, they successfully invest or lend money by managing the risk that the money will be repaid or not.
So, your job as the entrepreneur seeking capital is to reduce your investor or lender's risk.
Let me give you a simple example. Let's say that both you and your worst enemy both wished to open a new restaurant.
In this scenario, which is the riskier investment?
Clearly investing in your worst enemy is less risky, because they have already accomplished some of their "risk mitigating milestones."
Establishing Your Risk Mitigating Milestones
A "risk mitigating milestone" is an event that when completed, makes your company more likely to succeed. For example, for a restaurant, some of the "risk mitigating milestones" would include:
As you can see, each time the restaurant achieves a milestone, the risk to the investor or lender decreases significantly. There are fewer things that can go wrong. And by the time the business reaches its last milestone, it has virtually no risk of failure.
Let me give you another example. For a new software company the risk mitigating milestones might be:
The key point when it comes to raising money is this: you generally do NOT raise ALL the money you need for your venture upfront. You merely raise enough money to achieve your initial milestones. Then, you raise
more money later to accomplish more milestones.
Yes, you are always raising money to get your company to the next level. Even Fortune 100 companies do this - they raise money by issuing more stock in order to launch new initiatives. It's an ongoing process-not something you do just once.
Creating Your Milestone Chart & Funding Requirements
The key is to first create your detailed risk mitigating milestone chart. Not only is this helpful for funding, but it will serve as a great "To Do" list for you and make sure you continue to achieve goals each day, week and month that progress your business.
Shoot for listing approximately six big milestones to achieve in the next year, five milestones to achieve next year, and so on for up to 5 years (so include two milestones to achieve in year 5). And alongside the milestones, include the time (expected completion date) and the amount of funding you will need to attain them.
After you create your milestone chart, you need to prioritize. Determine the milestones that you absolutely must accomplish with the initial funding. Ideally, these milestones will get you to point where you are generating revenues (if you are not already generating revenues). This is because the ability to generate revenues significantly reduces the risk of your venture; as it proves to lenders and investors that customers want what you are offering.
By setting up your milestones, you will figure out what you can accomplish for less money. And the fact is, the less money you need to raise, the easier it generally is to raise it (mainly because the easiest to raise money sources offer lower dollar amounts).
The other good news is that if you raise less money now, you will give up less equity and incur less debt, which will eventually lead to more dollars in your pocket.
Finally, when you eventually raise more money later (in a future funding round), because you have already achieved numerous milestones, you will raise it easier and secure better terms (e.g., higher valuation, lower interest rate, etc.).
It might surprise you what you can accomplish with less money! So write up your list of risk mitigating milestones and determine which must be done now and which can wait for later, focusing first on what is most likely to generate revenues.
Suggested Resource: Want funding for your business? Then check out our Truth About Funding program to learn how you can access the 41 sources of funding available to entrepreneurs like you. Click here to learn more.
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