Archive for June 19th, 2009

19
Jun
09

Looking for money in all the wrong places…

Over the year’s I’ve been part of 6 start-ups, 3 successfully sold and 3 didn’t fare well at the end. Modestly, I must admit that I’ve helped over 100 companies launch during my career and if there was one commonality that they all shared it was money, and the lack there of.

“All we need is $500,000 to get to the next step, but no one is interested.” That is a very familiar comment with entrepreneurs, and whether it is $100.00 or $10 million, the challenge finding the money and investors can be like climbing Mt. Everest in mid-winter. Here are 3 ideas for you and have helped myself and clients in the past:

1. Investor, VC or Business Loan? The first reaction for many is to say “I’ll go after a VC or Investor for money.” It would seem natural and easy as this type of financing is more knowledgeable about working with entrepreneurial risk. But, get in line, as thousands are in front of you pitching the next “Sham-Wow” and giving up 50, 60 even 70 percent of their company and ideas in exchange for a shot at stardom.

Business loans are another idea for funding. Right now, our Government is offering an incentive to business banks to push the SBA loan program. This type of stimulas package is an entrepreneurs boom, and one you should seriously look at. Loans from $5,000 to $2 million are available now, and even with what is happening in the credit market, you can still get funding. Best of all, you aren’t giving up your company to get the ball rolling.

2. Business plans that make sense. I’ve seen them all and hey, even written some of the 168 page “War and Peace” type business plans myself. Bottom line here is to write only what is needed now, not what your dream will be next year or 10 years from now. Why? Simple, the person you are presenting to only cares about the what, who, when and why. Many times a 1 page or 2 page business plan is all that is needed. Keep it simple and win.

3. Asking for $100 or $10 million is just as hard, so ask for $10 million. If you asked me today how many of my clients have gone out of business because they didn’t ask for enough money up front, I’d rattle off a slew of names. Look, if you only need $500,000 to last for 2 years, perhaps you should ask for $20 million instead. If you really do have a $100 million dollar idea, get some real investors behind you. You’ll find it easier to get your running money up front the first time, because going back to the well for more, is twice as difficult and will cost you and your original investors with the ultimate delusion of stock and company value.

Start with clear messaging and strategy for your product or company. Keep description simple so that the average person without a PhD in Biochemistry can understand what it is, what it can do, why someone needs it. Finally, make it clear what’s in it for the investor with clear benchmarks of time, income and profit.

If you’d like to speak with me about writing a 2 page winning business plan, give a call. It’s free to budding entrepreneurs.

Allan
http://www.allanlinden.com
connect@allanlinden.com




June 2009
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