3 Little Known Reasons Why Angel Investors Fund Entrepreneurs


 

3 Little Known Reasons Why Angel Investors Fund Entrepreneurs

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:

  • In an average year (according to the Center for Venture Research at the University of New Hampshire), 250,000 angel investors will fund 60,000 companies, giving them $20 Billion in total.

  • Conversely, in and average year (according to the National Venture Capital Association), there are only 800 active venture capital firms, who fund only 4,000 companies, also giving them $20 Billion in total.

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.

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How To Raise Funding from Angel Investors

If you want to raise your first $100,000 (or more), click below to learn my battle-tested, 6-step funding formula for raising funding from angel investors

Raise angel funding today.

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Private Equity And Venture Capital Investors: How to Leverage Their Pessimistic Thinking


 


I speak to my friend Steve about once a month. And every few times we speak, he hits me with his latest new business idea.

Once in a while, the idea has merit. But most times it doesn't.

The other day Steve told me his latest idea. I could barely mutter two words in reply when he cut me off. "I forgot who I was talking too," he blurted out, "you don't like any of my ideas."

Interestingly, when he said that, I felt like a venture capitalist. You see, venture capitalists or VCs hear tons and tons of business ideas. And when you hear tons of ideas over many years, and see the vast majority of these ideas fail to materialize, you start developing a pessimistic attitude about new ideas.

And, after hearing so many ideas myself over such a long period of times, it seems that even I have gotten a bit negative or skeptical (well at least on ideas that my friend Steve tells me about).

Interestingly, I went to business school nearly 20 years ago with several bright guys who became venture capitalists. When they first became VCs, they were very positive people. They heard ideas with the mindset of "how can we make this work."

But after hearing thousands of ideas over many years, and investing in lots of companies that didn't pan out, their thinking shifted. In fact, today, their attitude is more like "what are the reasons that this idea won't work."

I tell you this not to be a downer. But to let you inside the head of a venture capitalist, or any investor that's been around a long time. Like it or not, these investors inevitably develop a bit of pessimism when considering new investment opportunities. And while you are speaking, their mind is constantly asking, "what are the reasons this idea won't work."

Why this matters is that you need to understand and play to this pessimism.

Here are four ways to accomplish this:

1. Pre-emptively address their concerns

As you now know, while you speak with VCs, they are considering the reasons your venture won't work. So, address these concerns before they even ask about them. For example, state in your presentation the top 5 concerns you think they might have and why you will overcome/address them.

Generally, you should address these concerns in the core part of your investor presentations. You should also have four or five back-up slides (that you keep at the end of the presentation for use if and when needed) that address other less-common concerns that you guess investors might have. By pulling up these slide when the investor voices the concern, you will have the best possible answer and seem ultra-prepared (which you will be).

2. Avoid superlatives

Most VCs I know hate superlatives.

Superlatives are words like "best," "greatest," "most powerful," "world-class," etc.  Unless you can back up these words, don't use them. Since VCs have been promised everything under the sun, and are turned off by such claims.

3. Relate your ideas to proven companies

One way to make your ideas appear more viable is to tie them to proven companies. For example, say that your company is like eBay but you [fill in the blank regarding how you differ]. Both consciously and subconsciously, this simile gives VCs and other investors the impression that your company might become as successful as that other proven company.

Importantly, don't bad mouth another company (particularly a successful company); as this will cause you to lose credibility. Rather explain why you are unique and can perform better and/or differently.

4. Boost your credibility wherever possible

Skeptical and pessimistic people (including VCs) are skeptical of grand claims. Hence why I told you to avoid superlatives above.

But you should also avoid other grand claims and bolster your credibility wherever possible.

For example, having a financial model that shows you are going to grow from $0 to $100 million in revenues in 3 years is generally going to be frowned upon. Since achieving such a feat is extremely rare.

Conversely, by researching the growth profile of similar firms, you can come up with more credible forecasts that will escape skepticism and show investors you really understand the business and its potential.

Likewise, you can boost credibility by getting customers. One of a VCs greatest concerns is whether you'll be able to acquire enough customers. Proving this early on significantly enhances your positioning and chances of raising VC dollars. Even if you don't have a product or service that's ready for customers, there are things you can do. For example, you can get alpha or beta customers. Or, at the least, you could survey customers and show VCs survey results and testimonials from customers saying they are seeking the precise solution you are building.

Finally, building a Board of Advisors and/or hiring accomplished employees will boost your credibility and show VCs that you know how to execute, and can thus effectively grow your business with the funding they invest in you.

Don't get me wrong. Most VCs aren't pessimists or curmudgeons that aren't fun to be around. But many do develop a natural pessimism against new entrepreneurs and ventures they meet. It is your job to overcome this pessimism. And once you do, you can gain the funding and the guidance of a VC that could help you dramatically grow your business.

 

Suggested Resource: In Venture Capital Pitch Formula, you'll learn exactly how to find and contact venture capitalists, exactly what information to include in your presentation, and how to secure your financing. This video explains more.

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How to Raise $1 Million or More

If you need millions of dollars in funding to build your business, you should raise venture capital.

Click here to discover the proven formula for raising venture capital funding.

When you click, you'll learn why the "old fashioned" way of raising venture capital is dead.

You'll learn why mastering the "T-Factor" is key to raising venture capital.

And you'll learn much more when you click here.

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Is Your Business Due or is it Hot?


 

I recently read a great story about basketball legend Nate “Tiny” Archibald.

Nate was such a great player he was inducted into the NBA Hall of Fame. 

But earlier in his career, he missed the first 20 shots of his South Bronx high school championship game!

In spite of this, his team stayed close and in the last minute had an opportunity to win with a last second shot. 

The team’s coach, well aware of Nate’s deep slump, diagrammed a play to set up a shot for another player.

As he did, Nate jumped up and said, "Wait a minute, Coach! I want the shot. Give me the ball!”

The coach, against his better judgement but impressed by the display of confidence, changed the play to give Nate the last shot.

Which of course he made and was carried off by fans and teammates as the hero of the night.

When re-telling the story later in life, Nate was asked how he was able to stay so confident after all of those missed shots. 
 

He answered, "Well, I've always been a 50% shooter. After I missed one, I figured the next one was likely to go in. After I missed two, I was overdue. After I had missed five, I figured the odds were increasing in my favor."

Then he was asked, "Okay, if that's how you think after you miss your first few shots, how do you think when you make your first six or seven in a row?"

"That's totally different," he said. "I feel that tonight's my night, I am on a hot streak, and that I am going to make everything."

"That's ridiculous," the questioner challenged, "You can't have it both ways."

And the future hall of famer so very sageley replied: "Of course you can."

Yes, great shooters serenely oscillate between these two equally empowering realities.

They are either due or they are hot.

Shouldn’t we think about our businesses this way?

If we are coming off a bad year, a bad month, a bad day, well then we are due for the next one to be very good.

And if things are going well, if we are seeing double digit growth, or if we just made a big sale, or if our new product launch is met with great reviews then...
 

...we are hot and should press our bets with more marketing spend, new hires, raising capital, etc.

In either case, the empowering stance is to frame whatever has gone before as a
positive for our future prospects.

Feeling and acting this way has a number of awesome benefits to our businesses and ourselves.

First of all, with confidence we do everything faster.

Meetings are shorter, and more action-focused. 
 

Conversations with prospects get to the point quicker.  

Hiring (and firing) decisions are made far more rapidly. 

And our confidence inspires all we touch.

I challenge you to name a great business leader whose persona was not dripping in confidence.

Think about the big and bold innovators from last week - Jeff Bezos, Warren Buffett and Jamie Dimon.
 

You don’t take on the challenge of fixing our nation’s broken healthcare system without oodles of confidence!

And, finally this eternally confident mindset is just a beautiful way to live and work, is it not?

Whether or not things in the end turn out as well as our strong and steadfast confidence should predict, at least between here and there we live and work in that magical and happy world where the second the ball leaves our hands...

...we just know it’s going in.
 

Is Your Business Hot? Or Due? 

Either way would you like more of the “good stuff” - more sales, more profits, more equity? 

Have a key business initiative or a key new product that you would like help in getting done and launched?  

Well, then click here and complete this short questionnaire.  

And whether your business is hot or due, we’ll reach out with our thoughts to help you.


 

4 Emails That Get An Investor's Attention


 

4 Emails That Get An Investor's Attention

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.

Here's What to Include Next

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.

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How to Raise $1 Million or More

If you need millions of dollars in funding to build your business, you should raise venture capital.

Click here to discover the proven formula for raising venture capital funding.

When you click, you'll learn why the "old fashioned" way of raising venture capital is dead.

You'll learn why mastering the "T-Factor" is key to raising venture capital.

And you'll learn much more when you click here.

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Viral Crowdfunding


 

Viral Crowdfunding

I recently wrote about the powers of Crowdfunding and how it not only provides money to entrepreneurs and business owners, but it provides customers and a massive marketing push.

But, I didn't have time to discuss one of the keys of Crowdfunding success, which is to effectively market your Crowdfunding raise to others.

It is important to always remember that the best product or service doesn't always win; usually it's the company who best MARKETS its product or service that wins.

Likewise, it's often NOT the best companies (i.e., with the best team or product/service) who successfully raise Crowdfunding dollars. Rather, it's the companies who most effectively market their Crowdfunding raise to others who succeed.

So, how do you market your Crowdfunding raise so tons of people fund you?

To answer this, I'm going to use the classic 4Ps of Marketing: Product, Price, Place and Promotions.

Product:
You always need the right product to get sales. In the case of Crowdfunding, your "product" is 1) your company (what you are building) and 2) what your offer is to those who fund you.

With regards to your offer, make it compelling and creative. For example, some entrepreneurs have given crowdfunders cool rewards such as invites to attend their launch party, public acknowledgements to them on their websites, and some have even named products after top crowdfunders.

Price:
With regards to price, people will obviously be more prone to write you a $50 funding check today for a promise to ship you a $100 product later versus requiring a $75 payment today.

Place:
Place refers to where you sell your product. In the case of Crowdfunding, there are several "places" or Crowdfunding platforms you can use. Three of my favorites are Kickstarter.com, RocketHub.com, and IndieGogo.com.

Promotions:
Here's where it starts to get really exciting. Promotions are how you tell others about your Crowdfunding raise so they fund you.

The easiest group to tell and convince are your friends, families and colleagues.

But huge Crowdfunding success comes when you can get thousands of strangers to hear about what you're doing and fund you.

Now some people think that the way to do this is via social networking sites like Twitter, Facebook and YouTube, as well as email and your website.

This is partially true.

I say "partially" since social networking sites are merely mediums with which to share information. The key is to have information that's worthy of being shared.

So, what information is worthy of being shared? And what information do people share with tons of others?

The answer is "viral" information. Such information is defined as that which people readily pass to their friends and colleagues.

Here are some more famous examples of viral information used by businesses.

Viral Offers: Groupon grew quickly and to a massive size by offering viral offers; offers that are so appealing that people spread them to others who might be able to use them.

Viral Unique Concept: A few years back, Alex Tew created "Million Dollar Homepage," a website on which he sold one million pixels for $1 per pixel. It was an extremely unique concept and people started talking about it and purchasing pixels. Alex generated over a million dollars from the venture.

Viral Cool: The manufacturer of Blendtec blenders made a series of videos called "Will it blend?" Its videos test its blender chopping up various products including an iPad (over 13 million views), an iPhone (over 10 million views), a glow stick (over 8 million views), an iPod (over 5 million views), marbles (over 5 million views). It has also created videos blending Wii remotes, rake handles and more. Collectively these videos have resulted in tens of millions of views and millions of dollars in Blendtec blender sales.

Viral Inspiring: our friends at Grasshopper.com, created an inspiring video called "Entrepreneurs can change the world." The video has been viewed over 1.3 million times to date on YouTube.

As you can see, viral marketing can get thousands, tens of thousands and even millions of people to hear about you, your company and your Crowdfunding raise. And it can thus result in you raising tons of money and gaining tons of customers for your company.

So start getting your creative entrepreneurial juices flowing and figure out ideas for spreading news about you, your product or your company virally. Once you come up with the idea, create the content (e.g., develop the video or other information), and then market it (by sending it to your friends via email, Facebook, Twitter, etc. and asking them to forward it to their friends).

Want Crowdfunding for your business? I developed a simple-to-follow program called "Crowdfunding Formula" that has helped numerous entrepreneurs raise great sums of money via Crowdfunding.

The program is a series of videos I recorded that walk you through each of the 14 steps to raising rewards-based Crowdfunding. Many of you have already joined the program and raised money.

If you haven't, click here to get Crowdfunding for your business now!

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How to Get Funded in 90 Days or Less

If you need funding fast, you have to use Crowdfunding.

Here’s how to do it right

1. It's fast. You’ll get the money in just 90 days or less.

2. It's easy. You don’t even need a business plan - you can get started right away.

3. You keep ALL the money. It’s not debt, and you don’t you don’t give up any ownership in your company either...

Click here to watch the video and learn more now

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The Biggest & Boldest Undertaking of 2018


 

The big news this week was the announcement that Amazon, Berkshire Hathaway, and JPMorgan were teaming up to form a completely new healthcare company.

As in Jeff Bezos, Warren Buffett, and Jamie Dimon. 

Wow. 

What does this mean for healthcare as we know it? 

What can your business learn and gain from this incredibly big and bold undertaking?

Well, all of us - frustrated by always rising healthcare costs and its way too often uneven and mediocre quality - should applaud these innovators and root for their success.

What gets me really excited, much more so than I was for last month’s “in industry” disruption attempt of CVS buying Aetna, is that these are true industry outsiders and legendary business leaders of the highest rank.

Jeff Bezos will bring his hyper focus on the end customer experience, and then how to apply technology to make that experience as quick, delightful, and consistent as possible.

Warren Buffet will bring his incredibly prescient sense of the brand, franchise, leadership integrity, and cost drivers of any company, and from that sense serenely and precisely forecast its future cash flows.
 

And with Jamie Dimon, it is risk management, the ability to hedge against and optimize for vast and complex scenarios of potential economic results. 

Combining these three sensibilities creates incredible potential for customer-centricity, quality improvement, and cost reduction in this gigantic domain of our society and economy that has frustrated so many for so long.

At the top of this “frustrated” list for sure are those business owners committed to offering quality healthcare benefits to their employees, but struggling mightily against the absurd costs of doing so. 
 

But as any business owner knows, there is nothing like a hard and determined competitor to force prices down and services up.  

Because it is one thing for healthcare industry incumbents like Aetna, Anthem, and Humana to "talk the talk" about reducing costs and improving value... 

...but it is another thing entirely when they are forced to do so because of the existential threat of a “disintermediating” juggernaut like Amazon and friends represent here.

And oh yes, none of these companies should believe for a moment that Amazon, Berkshire Hathaway, and JPMorgan will for long be engaged in the healthcare business as they say are now - “on a non-profit basis and solely for the benefit of their own company’s employees.”

They will start that way, and create significant advantage as their baseline healthcare costs drop below their competitors, but just as Amazon does with its web services platform, they will soon start selling their healthcare platform as a service to the nation at large.

And then we will see the benefits of real competition for our healthcare dollar -  lower prices, expanded services, and yes better health for all.

This will be awesome. 

And for those thoughtful and “techno-optimistic” business executives among us, it might not even be the best part.

No, that would be that with this big and bold undertaking, Jeff Bezos, Warren Buffet, and Jamie Dimon inspire us to believe that our most vexing societal and economic problems can be solved through...  

...that so simple combination of applied technology and sound business principles and ethics.

Shouldn’t we act on this inspiration?
 

Through a re-examining and re-engineering of how our businesses utilize technology to deliver more value to our customers at a lower cost? 

And then with our better engineered business, shouldn’t we then attack, like Bezos and Buffet and Dimon, really big new markets and opportunities?

Yes, why can’t we too can be the makers of business history and reap the rewards for so doing?

To heck with the status quo!
 

Like some "Bezos and Buffett" magic injected into YOUR business? 

Not generating the kinds of profits that attract to it business suitors of all types? 

Are you unable to pursue good business opportunities because you just can’t seem to get out of your own way?

Have a key business initiative you would like fresh ideas on how to get done? 

If any of these describe your current situation, then complete this short questionnaire and we’ll reach out with our thoughts to help you.


 

The 5 Questions That Determine Your Business' Value


 

Determine-Your-Business-Value

The biggest aspiration of most entrepreneurs and business owners today is to grow and then sell their businesses. And why shouldn't it be? Selling your business creates more multi-millionaires than any other endeavor.

The key issue however is this: are you growing your business the right way, and are you focusing on the right things? You see, when it comes time for buyers to appraise the value of your business, they might find different things to be important than you do. And the last thing you want to do is focus your time developing aspects of your business that buyers don't value. Particularly when doing so forces you to neglect the things they do.

Below are five key questions that will determine your business' value. Answer them honestly. And then work to improve your position on each.

1. How replicable is your business?

When corporations consider buying a business, they make a "build" or "buy" decision. That is, they ask whether the time and money it would take to build a similar business from scratch is greater than the cost to buy the business from you now.

As such, the more unique and less replicable your business is, the better. So think about how replicable your business is. For example, could another company easily replicate your products or services? Could they easily hire and train a team as good as yours? Would it be simple for them to build a customer base like yours?

Answer these questions honestly and focus on building a profitable AND harder-to-replicate business going forward.

2. How easy will it be to run your business after acquisition?

Why do we pay a premium for a new automobile versus a used one? Because we know the new one doesn't have any problems. It hasn't gotten into any accidents. It doesn't have an oil leak, etc.

Similarly, acquirers will pay a premium for a business that is in great "running condition." Sure, every business will have its challenges, but a business that is simple to run, like a new car, will be highly valued.

So, let me ask you this: if you sold your business today and retired, would the new owner be able to easily run your business thereafter?

  • Do you have systems in place that enable your business to run consistently every day?
  •  
  • Are your employees trained to handle all key issues that arise?
  •  
  • Will your customers continue to buy from your company even though you're no longer a part of it?

Always think how your business will run after you're gone. And if currently it wouldn't run smoothly, take actions now so that it will.

3. How has your business performed financially?

Unless the majority of the value of your company is in unique and patented technologies, buyers will thoroughly review your financial performance.

Clearly, they want to see strong revenues and profits. And they want growing revenues and profits. If your revenues or profits are on the decline, many buyers will project that decline will continue, and thus significantly decrease the valuation of your business. Fortunately the opposite is true, so do whatever you can to have strong and growing revenues and profits.

4. How stable is your customer base?

Your customers are the lifeblood of your business. The revenues you generate from them pay the bills and ideally fund great profits.

As such, acquirers will scrutinize your customer base. And the most important question is how stable that base is. For example, do they expect 50% of your customers to leave after the acquisition? Or 25%? Or 10%? Or none?

Clearly, the more stable your customer base, the more attractive you are to an acquirer. In the ideal situation, you have signed contracts with customers so the acquirer has complete certainty they will be retained. If not, ideally your customers have gotten in the habit of buying your products or services, or have a solid preference for them, so their continued patronage is likely.

Likewise, having a diversified customer base, as opposed to just a few very large clients, helps. Because with fewer, larger customers, there's more risk that one will leave and take a large chunk of your revenues with them.

5. What are the odds of sustainable future growth?

When you combine the four questions above, much of what the acquirer is trying to answer is what your odds are for future growth.

For instance, if you have a stable customer base, your financials are strong and growing, your business is unique, and it will be easy to run your business post acquisition, then your odds for future growth are great and you will have tons of suitors.

And tons of suitors interested in buying your business means that they will bid the value up and up, so when you sell, you will get a great premium. Which is probably one of the reasons you started your business in the first place. So do this, and make it happen!

Suggested Resource: If you want to build a sellable business, watch this free presentation called "Million Dollar Exits: How to Build a Business You Can Sell For Millions of Dollars." It starts by explaining the 3 most dangerous trends facing entrepreneurs today. Or learn more below.

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Million Dollar Exits: How to Build a Business
You Can Sell For Millions of Dollars

What’s the ultimate path to wealth as an entrepreneur?

Build your company and then sell it for millions to the highest bidder.

In this video, I explain precisely how to build a sellable company.

The video starts by explaining the 3 most dangerous trends facing entrepreneurs and business owners today (so you can avoid them).

And then shows you the right way to build a sellable business.

Click here to watch the video now so you can build a business and sell it for millions

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How Freudian Thinking Allows You to Raise Crowdfunding


 

The influence of the crowd is a major factor in Crowdfunding, as psychology often plays a role in the failure or success of a Crowdfunding campaign.

Crowd psychology is a form of social psychology. Regular people are generally able to gain power by acting as a group. It has been shown through history that big groups of people have brought about sudden and dramatic social changes in a way that sidesteps traditional due process.

Social scientists have come up with a number of different theories to explain crowd psychology. In addition, scientists have also come up with several different theories regarding the way that crowd psychology is different from the psychology of the individual within that crowd.

Freud on Crowd Behavior

First, Sigmund Freud had a crowd behavior theory. He believed that people in a crowd act differently than individuals. His theory was that the minds of everyone in the group merged to form a new way of thinking. The enthusiasm of each member of the group would increase, and he or she would become less aware of the nature of their actions.

What this means for your Crowdfunding raise: Create a community around those who provide Crowdfunding to you. Use the community to make these people zealots. Encourage them to spread the word about your company so more and more people support you.

Communal Reinforcement

One amazing social phenomenon that happens within a crowd is communal reinforcement, in which an idea or concept is asserted repeatedly, even when there is limited evidence to support it.

As time goes by, the idea or concept becomes reinforced into becoming a stern belief in the minds of many people and can often be regarded as fact by members of the group. Imagine how persuasive you could be by actually showing them the evidence to support your promises (and you should)!

What this means for your Crowdfunding raise: When setting up your Crowdfunding platform and profile, choose a main message and repeat it over and over-in your headline, in the description, in your video, and in your comments. Repetition sells!
 
Social Proof

Online crowds come together virtually. They act and behave collectively, producing effects that would not otherwise be possible if they were approached by themselves.

But they need to see social proof. No one wants to be the first one to donate (except your mom), but if they see that others are doing it, they'll perceive it as more legitimate and will be more likely to fund you.

What this means for your Crowdfunding raise: Don't tell the masses about your Crowdfunding raise at first. Rather, start with your friends and family members. Then, when folks who don't know you come to your Crowdfunding page later, they'll already see a lot of others who've pledged their money to you.

Likewise show as much activity on your Crowdfunding page as possible. Let people see your comments as you answer questions and repeat your message. And make sure to publicly thank those who made donations and make sure people see the progress of your funding as you receive it.

When you raise money from sophisticated angel investors and venture capitalists, there is a lot of psychology involved. When raising Crowdfunding, it's even more so. So, keep this in mind and leverage it. And you will be able to raise Crowdfunding to start and/or grow your business.

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Edison DID NOT Invent the Light Bulb


 

Did you know that Thomas Edison DID NOT invent the light bulb.

Why do I tell you this?

Because every single day at least one entrepreneur contacts me with some fear about someone stealing their idea.

And their fear is unjustified.

Successful entrepreneurs don't focus on the fear of someone stealing their idea. Rather, they focus on executing on the opportunity by bringing their idea to market.

Which is what the 22 inventors of the incandescent light bulb before Thomas Edison FAILED TO DO.

That's right. Twenty-two inventors had the idea before Edison (not only did they have the idea, but 22 people actually invented incandescent electric lamps before Edison did).

And Edison didn't steal their idea. Rather, Edison improved on their idea by first understanding the market. He realized that a more commercially viable and longer lasting light bulb was needed if light bulbs were to go mainstream.

So, he and his team created this product and the rest is history.

The moral is that he who has the idea first generally doesn't win. In fact, if your idea is so good, usually others have thought of it before you or at the same time. The winner is the one who takes is to market first, tweaks it based on customer feedback, and scales the business.

Most people don't have what it takes to go from an idea to a commercially viable product to taking it to market. That's why spending tons of time and energy protecting your idea is often a waste of time. Since the people you're protecting your idea from can't execute anyway. And those that can (i.e., successful entrepreneurs) generally have a ton of their own ideas to focus on. So you should be spending your time on execution.

(Likewise most ideas change dramatically once you start getting customer feedback; and you NEVER get that feedback if you keep your ideas to yourself!)

Importantly, the world is littered with quality ideas which never materialize. From motivational speaker Les Brown:

The wealthiest place in the world is a cemetery. Now one would ask, "For what justifiable reason is the wealthiest place in the world a cemetery?"

Simply put, in a cemetery, you will find that there are books that were never written. There are songs that were never sung. There are ideas that were never acted upon-dreams that were long forgotten. If one were to die today, then what ideas and what aspirations would die with him or her?


So, please stop focusing so much on protecting your ideas, and start acting on them!

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Customer Segmentation Marketing: Are You Doing It?


 

Customer-Segmentation-Marketing

Would you like a tool to attract more leads, convert more leads into paying customers, and better satisfy your customers?

Well, there's a market research tool that accomplishes just that and it's called Customer Segmentation.

Customer Segmentation is the process of separating your customers into sub-groups based upon similarities. As a simple example, a clothing store might segment its customers into two groups: men and women.

There are two core benefits to customer segmentation. The first is that it allows you to better service customer needs. Clearly, when you know that precise make-up and needs of your customer segments, you can better satisfy them. For example, a gym might offer exercise classes specifically for women and others specifically for men, each of which target and solve that gender's core workout needs.

The second benefit of customer segmentation is that it allows you to better communicate the benefits and of your offerings and thus increase conversion rates. For example, a car cleaner that offers special detailing services to sports car owners would better attract those customers than competitors offering generic car detailing services.

So how do you go about segmenting your customer base? The key is to collect data from your customers in order to better define them. One type of data is customer purchase data. Specifically, you should create lists of customers who have purchased certain products or services from you.

The second data you should collect, particularly if you are a startup or are launching a new product or service, is survey data. Using a tool like SurveyMonkey, you can survey your current and prospective customers to identify their wants, needs and current purchasing habits.

Importantly, in both your surveys and customer data, you want to collect and analyze both demographic and psychographic information. Demographic information includes variables such as the age, gender, zip code, and income levels of your customers.

On the other hand, psychographic information defines the wants and needs of your customers. It includes variables such as opinions, beliefs, values and interests. For example, while two customers might share similar demographics (maybe they live on the same street, are the same age and gender, and have approximately the same income, etc.), they may vary wildly from a psychographic standpoint (e.g., maybe one is extremely health conscious, the other extremely environmentally conscious, etc.)

Once you collect all the data, you are ready for the most important part of the customer segmentation process, analyzing the information. The official term for this analysis is "cluster analysis."

The result of your cluster analysis will be several clusters or groups of customers that share distinct demographic and/or psychographic characteristics. And then once you identify these groups, you can better market to and them.

For example, at Growthink, we use a basic segmentation model with two segments: startups (pre-revenue) and established (post-revenue) entrepreneurs. This simple segmentation helps us better understand and serve the needs of these two distinct groups.

For our clients, we've identified all types of unique customer segments. For example, one client had a customer group that was willing to pay more for their service as long as they were not bothered with details (we called them the "Don't Touch Me's"). Conversely, as is the case with many businesses, we found a segment that is completely price conscious and will always shop for the lowest price (you generally don't want to serve these customers).

One final benefit of segmentation analysis is in identifying unique partnerships and advertising venues. For example, if you identified that a large segment of your customer base was very health conscious, you could partner with local gyms and health food stores and/or advertising in health related journals. Most likely, your competition would not be doing this, and would miss out on this opportunity.

In summary, customer segmentation analysis will give you a competitive advantage by allowing you to attract more leads, convert more leads into paying customers, and better satisfy your customers.

Start by assessing any customer data you have, and supplementing that with surveys including product/service usage and needs data along with demographic and psychographic questions.

Next, conduct a cluster analysis on the data (I found cluster analysis software online, but you're probably better off finding a freelance market research professional who can conduct the analysis for you).

Finally, after identifying your segments, cater to them. Cater your marketing messages and offerings to them. And you'll start seeing your revenues and profits soar.

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