Prepare and Prepare Well!

The global business climate takes cognizant of the entrepreneurial spirit that continues to gain momentum. The 2nd Season of Lion’s Den is just about out. Being on that show exposes me to many people and I get many requests for mentoring and support from entrepreneurs with start-ups. But here is where I find a huge challenge in supporting these individuals, many entrepreneurs fail to express the value proposition in their business initiative, that makes them stand out. There are few things one can do to help a potential investor see your vision. The tips I describe below will also help you get a better perspective on what value you are offering an investor.

“Ideas are easy. Implementation is hard.” -  Guy Kawasaki, founder of AllTop.

Keep it Simple!

On first impression most people tend to get too technical about what they do. Don’t make that mistake when you present your ideas because you lose your audience. A possible investor will want to know your story. What has led you to where you are in terms of the business you are doing? There must have been something that inspired you, and this is what will get an investors’ attention. Even though people have different stories, the journey to beginning a business is similar for most people. After you have your story intact, you need to describe very clearly what unique solution your product meets. There has to be a unique value proposition.

Know how much you want to seed?

I know how passionate one can get about an idea they developed. You will also have your own ideas about how much money you need for your business. However, the more money you need, the more equity an investor will want in some cases. But be careful not to give away too much, otherwise you will get less profit for all the effort you make. Remember, this is an idea you have passion about and your passion drives how much you are committed to your business. The area of equity is something you need to give long and careful thought to.

What is the money for?

Be upfront about what you need the money for. Even if it is for sustaining yourself – as in a salary; be forth right. Coming from an investor’s point of view, we prefer to know exactly what we are getting into.

Map out your financial needs, they don’t have to be cast in stone, but it needs to be clear what you need the money for. The investor may not agree with everything you have in your financial plan, but at least when you have a clear indication of what you are looking for and you can begin the process of negotiating, with the likelihood of a good outcome.

"In investing, what is comfortable is rarely profitable." - Robert Arnott

Be realistic

Don’t over promise just to get your possible investor excited about the projections of your business. A seasoned business person will see right through it and will see you as a desperate entrepreneur. If you aren’t sure about something, just declare it. For example, you may not be certain of your projections because your industry is still growing; but the investor could offer some help in getting some perspective based on their own experience in developing their business.

Being able to see your business potential and its limits gives you the correct perspective of where you are heading. You have worked very hard to get to a place where you have the confidence to seek out an investor; don’t let the lack of preparedness, allow opportunity to escape you.

Darshan Chandaria

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