Describing the Future
Karl Dakin
I help you overcome challenges to raising capital. Take advantage of my Motivated Money Method to identify those investor candidates that are most likely to invest. Top expert in fundraising.
The value of a business in the eyes of an investor is not its value today but the value of the business when the investor exits their investment at some point in the future. The selection of an investment opportunity will include an assessment of what a business has done and is doing today. However, the ‘win’ for the investor is the business succeeding in attaining its goals and being successful.
?This perception of a business becomes a challenge for the small business that needs to describe the future.
?A small business cannot simply state that they intend to do better. Some small businesses make the mistake of pointing at what they are doing today and projecting that they will do more. They fail to state a number upon which an investor may calculate the outcome of their investment. They fail to demonstrate the difference between a startup and a growth company. Scaling a company, particularly one intending fast growth, requires more people, more equipment, more assets, more systems, and more everything within an increasing complexity that is vastly different from the startup. A small business that fails to provide information on how scaling will be accomplished will lose credibility with the investor candidate.
One approach to describing the future is to provide details on how the business will grow up. This would be like describing a child getting their first tooth, learning to walk, going to 1st grade, getting a diploma, and getting their first paycheck. It is a linear progression along a path with different points in time acknowledged as progress. I do not favor this approach because it is all about the business, not the investor.
?The approach I favor is picking a time in the future that matches the term desired by the investor candidate (six months, one year, three years, five months, or more). I then apply the rate of return that the investor seeks from their investment (annual ROI of 5%, 10%, 15%, 20% or more). Using the dollar amount of the small business capital goal, I apply the target ROI and calculate the total dollars that must be distributed to the investor at the investment term.? I now have a target or goal that meets the investor's criteria.
?I then apply the business model for the products and services sold, which spells out the potential profit from a single sale at different production volumes. I determine the volume of sales needed to meet the investor's criteria. However, this minimal projection leaves no money for the business founders. I then determine what additional sales are needed to attain the business founders' goals. With this information in hand, I reverse engineer the challenge by determining what tasks must be performed at what times with what results to attain the goals of both the investors and the founders.
?A small business may be unable to achieve both goals. This may result in bootstrapping the business for a while longer until the mutual goals become attainable. It may result in finding a different source of capital with a lower price, different term, different struture or other change where everthing becomes possible.
?The framework for the description of the future is now complete. Details are needed. The description is presented as a process with a series of steps resulting in outcomes. The later steps are dependent upon the success of the earlier steps. Names, dates, descriptions, charts, graphs, images, demonstrations, market forecasts, customer feedback, expert analysis, or other information until the story of the small business is understandable to the investor as well as everyone who must perform any of the tasks needed to obtain the mutual goals.
Successful Funding
?Chris Miller will be my guest on the seventh Successful Funding show on Tuesday, March 5 at 8 am MST. Chris is Chairman of the Board of the National Center for Community Capital (NC3). NC3 is advocating for the establishment of Diversified Community Investment Funds – locally owned and operated funds to address the capital needs of a community, including its small businesses and community projects.
?You can register to attend this event at:
?Arlen Meyers was my guest on the sixth Successful Funding show on Tuesday. Arlen, a physician, educator, and advocate for entrepreneurship, was the founder of the Society of Physician Entrepreneurs. https://sopenet.org/? We talked about the challenges of becoming a physician entrepreneur, which spans a wide range of issues from higher education, funding, and public policy focused on ‘sick care’ and not on healthcare. Arlen concluded that the greatest investment that anyone could make in improving our healthcare system is to cast a ballot in every election.
You may view all of the Successful Funding shows in my Posts on my LinkedIn profile at: https://www.dhirubhai.net/in/karldakin/
?The Successful Funding show on my LinkedIn profile will repeat weekly at 8 am MST on Tuesdays. You may register to attend by going on LinkedIn, searching for Events, clicking on the Events button, searching for Successful Funding, and then clicking on the Attend button. You should receive an email with a link to save to your calendar. You can also click the Share button and obtain the URL link to the show to put it in your calendar.
??Superpowers for Good
?I had the pleasure of being interviewed by Devin Thorpe on his SuperPowers for Good show, which is affiliated with the Impact Cherub Club and SuperCrowd. We discussed impact investing, investing in small businesses as a wealth-building method, and access to capital through investment crowdfunding. Devin advocates supporting small businesses through Reg CF crowdfunding and firmly believes that systematic investment ($100/month) in small businesses will build wealth at a rate comparable with more common investments in Wall Street or real estate.
?The show may be viewed at the following link:
领英推荐
??Don Cohen
?Next Wednesday, I will be a guest on Don Cohen’s show.
?More information will be posted soon on his LinkedIn profile.
??Founded in FOCO
?Next week, I will present a workshop on What is Your Funding Potential? on March 8 from 11:00 am to 12:30 pm in Fort Collins, Colorado, at the Founded in FOCO event.
?The five-day event offers 100+ sessions with 100+ local experts to help you?spark innovative ideas,?learn from peers, and?build relationships.
??SuperCrowd 2024
?I will co-host the SuperCrowd 2024 event, "The Impact Crowdfunding Event of the Year,” held online on April 17th and 18th.
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Karl Dakin, the Capital Coach
Dakin Capital LLC
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I help you overcome challenges to raising capital. Take advantage of my Motivated Money Method to identify those investor candidates that are most likely to invest. Top expert in fundraising.
8 个月Predicting the future (tomorrow's edition) differs from describing a desired future.