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25 Mar

For any business and entrepreneur once the start-up phase is complete and the business starts to grow, the challenges found will be unique and different. This may often be something outside of the entrepreneurs comfort zone and you will have to be really committed to remain motivated during this time. New people will come in, the business plan will need to be reviewed and adjusted, a new round of business finance may need to be considered, a different level of thinking will be required and much of the old way of doing things will have to be left behind.

But, growth also creates personal challenges for the entrepreneur. Here are some of the more common issues that entrepreneurs wrestle with as their business grows:

- Delegation: Your "baby" is now a "teenager" ready for more independence
Letting go is often difficult for the entrepreneur. We have been with our business all the way through its growth, through the good and the bad times. But at some point, if we want our business to grow successfully, we have to begin to delegate. At first it will seem that no one can do what you do as well as you can. But just like raising a teenager, at some point you have to begin to let go so they can learn and grow up. Your business will go through this same difficult transition. If you don't begin to let go, you business may never successfully move into its next stage of development.

- "My company just isn't the same as it used to be"
With each person we hire, our culture can change just a little bit. And over time, this can lead to a business that does not look like we had intended or envisioned. One area that you must keep control of is your culture. Your values shaped the culture of your business as it began, but to maintain that culture you must actively manage it. You do this by who you hire, what you reward, what you celebrate, the structure you create for the business, your communication, etc., etc. Be deliberate about the culture you intend and think about how each action you take over time can effect this culture.

- "So just what is a CEO supposed to do, anyway?"
For many entrepreneurs, this may be their first time as a CEO. That title means very little in the early days, but as the company grows it takes on more meaning. Defining your role and your style as the CEO of your company takes planning and specific effort on your part. It may even feel a bit awkward at some point, but you have to establish what your role will be as the CEO. Play to your strengths.

- The Fear of the Unknown: Moving from hands-on to strategic
Many entrepreneurs start their businesses because they like the hands-on part of their business. Engineers like to engineer. Furniture makers like to build stuff. As some point in the growth of the business, the entrepreneur begins to move away from the hands-on part of what they company does. This can be a painful and frustrating period. Keep this in mind when you decide how far you want to grow the business. It is OK to keep it at a size that allows you to stay in the hands-on part of what you do.

- "How come everyone keeps forgetting this is still my company (sometimes, including me)?"
I remember how at some point it seemed that I was chasing everyone else's goals for our business. Our banker, our CPA, our attorney, fellow entrepreneurs, our managers all seemed to have their own vision for what we could become and ideas for where we could take the business. Some of these folks wanted us to take our business public. That is not where I wanted to go, but I felt the pressure to look seriously in that direction. Even though it possibly cost me some money, I am so glad that I ultimately listened to my own aspirations. I would have been very unhappy running a public company. Remember: it is your business!

20 Feb

Attracting angel investment to fund your business plan is a hot trend as it not only gets you past the lending hesitant banks but of course it ensures that you get get some much needed knowledge, experience and contacts into the business. An experienced angel investor can really ensure that your business plan not only comes to life but achieves its full potential and more.

But by all means don't choose the first and best business angel that comes along with an offer of much needed business finance for your business. Remember that its your idea that the investor is after. Yes of course you as the entrepreneur need to funds but the investor is also looking for the few and far between opportunity with a real potential for a high return.

Only 1% to 2% of all business plans presented to either angels or VCs receive funding. Entrepreneurs need to read the necessary books and speak to individuals with financing experience or expertise so when the opportunity arises, they are fully prepared to present their concept to investors. Incomplete business plans are unacceptable in today’s competitive environment.

Ideas are a dime a dozen. Fundable businesses are those that can demonstrate that they have the products and people to enter a market and either take significant market share or dominate.

Entrepreneurs should use informal networks to be referred to individual angels and VCs. It vastly increases the chances that a business plan will be reviewed. Also, entrepreneurs should target investors that have a history of interest in a sector or the stage of a business.
An entrepreneur should invest capital in his/her own startup. Not doing so is a major red flag for investors.

During the initial conversations with an angel group and during the presentation to the angels, it behooves the entrepreneur to find out which of the members are the real decision makers. This is difficult to ascertain but can be very valuable information because angels are human and they feel safety in numbers. The entrepreneur should focus on the more experienced angels and the managing directors of the angel group.

Investors will be far more likely to invest in a Ltd. Co. (as the liability remains limted to the company) than in theor personal capacity. Some VCs are weary of complex capitalization structures and an entrepreneur risks losing access to larger amounts of capital. In addition, major company decision making can become unwieldy if large numbers of investor/owners need to be consulting. This process may become difficult to manage as when a large amount of stakeholders are incolved. Where possible, aim to keep the the stucture simple and the amount of stakeholders to a minimum.

Finding an angel investor is like finding a spouse. Personal chemistry is critical because it is a long term relationship. This chemistry may take time to build so invest quality time in getting to know the angel. If you are dealing with a group of angels, it is the lead angel that will be on your board or that will manage the investment on behalf of others that should be your focus. It is far better in the long run for an entrepreneur to turn down an angel investment because of lack of chemistry and wait for a better match.

Investors need to be kept appraised of the company’s progress at least quarterly if not monthly. If there are problems, investors should know early about them. Involving them in developing possible solutions or finding the right people to help is a wise course of action. Waiting until the last minute before disclosing major issues entails the risk of lawsuits from an investor for fraud or misrepresentation.

Entrepreneurs are responsible for knowing basic financing concepts, preparing well for investor presentations and choosing their financing partners carefully. A company can sometimes survive operational mistakes, but running out of cash means the company ceases to exist. By having a good understanding the financing process as well as the pros and cons of financing methods, entrepreneurs will increase the likelihood of their company’s survival and long term success.

You as the entrepreneur has as much of a responsibility in finding the right investor for your business as the investor has for choosing the right opportunity. You have spend time and research in creating the the business idea and business plan. make sure you take the time to choose the right investor for your business.

25 Jan

When communicating with investors who may have shown interest in your business plan make sure you communicate what the business means to you but also importantly the potential of the business and information you may have that supports this. Wether you found these investors on a Investors network, crowdfunding platform, networking event or through a friend or colleague, remember that they are asking this question: What is in this for me?
Investors are also just people and people are open to being inspired. The most effective way to inspire an investor is to show a an idea which is well researched and realistic in execution.

Inspire through talking about the background of the idea.

Any investor will be aware that they need to see the successes on the business and the executives in the past so they can try to predict if the new business will be successful. If you have been funded in the past, show them how you used your capital to bring growth in the company. Show them things like milestones that were reached operationally, how you pushed through the niche market, and how much rewards your investors received. If you have a new company then show them what things your management team has been able to achieve with the new companies that the built from the ground up.

Show that you understand the customers that you are targeting.

When an investor looks at a business, they are looking at the possibilities of relationships with the customers. You must have a clearly outlined section in your business plan that outlines a time line of how you will get your product out to the public in the market. If you do not have a plan to reach your customers, you will not bring in a profit and the investors will not either. You need to show them what your method of delivery is with your customers.

Make sure you emphasise a clear customer loyalty strategy. Getting customers are important but keeping them even more so. No investor wants to see their investment going into advertising and promotional strategies that can not satisfy and keep the the customers that they are attracting.

One of the most common example of locking in a customer is shown with the telecommunications companies. They offer bundles to their customers for the services they offer. When a customer makes a purchase for one service, they will be given the chance to get more service for a lower price. Also, once you have become a customer, you can avoid any installation costs, unless you decide to make a change to another provider. This is a lock in tactic as well. Providing excellent customer service and high quality products can also work as a lock in for your customers. This will keep your competition away. This is called building barriers that surround your customers. What will you do to guard your revenue? The investors will be interested in this.

Realistic financial figures will be crucial.

When you have financial assumptions that are well reasoned and great projections you will be showing that you have maturity and credibility. Some investors will only look at your financial section in your business plan. You may be completely realistic in your assumptions and pro forma statements, which are your projected financial outcomes. If you want to be seen as credible, you will need to have consistent amounts included in the penetration, the operating margin, and the revenue per employee information.

Certainly anyone can come up with attractive financial figures that sounds great to the inexperienced investor. But those who are with getting involved in your business and provide both the business finance and support you need, will not be easily fooled.You will need to provide some evidence that the type of sales and profit projections you are coming up with are realistic with the resources at your disposal.

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