Download ppt - Getting Your Business Started

GETTING STARTED

August 9, 2004Presented by R. Wayne Hicks

Presented by R. Wayne Hicks

www.cbincubator.org

Business OwnerCorporate

ExecutiveI HAVE BEEN

WHERE YOU ARE!

The secret to success…

“NEVER NEVER NEVER….

GIVE UP!”

-Winston Churchill

CONGRATULATIONS

You are Here!You are taking the toughest stepYou have listened to everyone tell

you how you can’t, how it’s too risky, how all of their friends tried something similar,etc.etc.etc.

BUT YOU STILL ARE HERE!

Today’s discussion objectives…

Convey to you some practical, fairly simple ways to avoid pitfalls (voice of experience)

Help you BELIEVE you can do itWork with you to create a clear

Plan of Action when you leave that helps you refine your direction and focus

The movie Jerry Maguire provides inspiration…SHOW ME THE MONEYSHOW ME THE MONEYSHOW ME THE MONEYSHOW ME THE MONEYSHOW ME THE MONEYSHOW ME THE MONEY

Today we are thinking about…

When to get IT (THE MONEY)How to get IT (THE MONEY)And, most daunting of all…WHERE

to get IT (THE MONEY)

Wise words…

“Don’t borrow money from friends, family or anyone you know”. So who does that leave us?

Other wise words- “always pay cash for everything”. In this Millenium? Are you kidding me?

Final counsel…“It’s never GOOD to be in debt.”

TIME TO DEBUNK SOME OF THESE MYTHS………………….

Who lends money and why?

More people/institutions than you can think of probably….here’s just a few:– Founders of companies (that is YOU)You

may have sources you haven’t thought of….– Family (Great Uncle John, Aunt Fran,etc.)– Banks (only when you don’t need them )– Angel Investors (we’ll talk about these folks)– Internet sources (this is HUGE)– Suppliers/Customers

Other sources of Money…

Incubator fundsStrategic partners (don’t ignore

this one)Venture capitalists (investment

banking types) Non-traditional lenders (very

interesting group)

What do all of these have in common?Presumably, access to capital. No matter

what- make SURE you know WHO you are dealing with and exactly what their credentials are (especially on the Internet)

A financial motivation- they are looking for returns- lenders/investors are not doing this “for their health”. They want a financial return!

Varying degrees of risk tolerance

What are they looking for?

Lenders and investors are focused on many factors which eventually end up looking like this: THE…– PEOPLE (who is the ENTREPENEUR?) We

are going to spend a lot of time on this.– BUSINESS OPPORTUNITY

- DEAL (this means the lending rate, the ownership(equity) piece,etc. or really a TECHNICAL TERM FOR THE MONEY!

What are they looking for?

The Growth Potential (the market,etc.)This is all part of your research. YOU MUST KNOW THIS LIKE YOU KNOW YOUR SOCIAL SECURITY NUMBER.

Exit Strategy (how do they get out? Do you pay back your loan? Do you buy out their ownership interest? Etc.)

What matters most?

In my humble opinion-

– You, you, you, you, you, you, you, you..

The numbers of people who fail before they start is staggering…Research and understand your market– Know more than anyone about your product,

your idea, the market potential, etc.– Sounds dumb, but many people do not do

their homework– Look for the problems- have others tried to

do this and failed? Is the market mature (far along in its’ life?) These are ok, but you need to know what you don’t know……………

Get a bunch of opinions

There is nothing worse than making up your mind to do something and hearing all the “noise” you hear about why you shouldn’t and then go out and ASK for more opinions but do it….

Ask your neighbors- ask a friend at work- ask an accountant, ask your cousin who is a lawyer

Get input….

Go to the library and grab every book on your topic

Use the Internet- a GREAT timesaving tool!

Act like my 4-year old Khalis- regress back and Drive yourself and everyone around you NUTS asking questions and LEARNING!

4-YEAR OLDS LEARN MORE THAN US!

Ok, now I know a bunch of stuff, now what?Start working on your package.First and foremost- who are YOU?

Think (hard) about…–Why are you doing this? Practice

telling yourself in the mirror– Did you lose your job? Were you laid

off?– Are you tired of working for someone

else?– Has this been a lifelong dream?

…now what?

You………………….– Why are you passionate about this?– Are you willing to work night and day to see

your dream?– What support do you have in your life to help

you when the going gets tough (and it will)?

– THESE SEEM OBVIOUS BUT EVERY SUCCESSFUL ENTREPRENEUR HAS ANSWERED THEM A THOUSAND TIMES.

Carefully work on the package..

Sounds silly, but just write it down.People get nervous if they don’t

prepare. If you prepare THOROUGHLY and

you CARE PASSIONATELY about what you are doing and why you are doing it and how it will work- you will find a way to convince SOMEONE to help you.

The Pitch….

What in the world is a PITCH?Simply put, it is YOUR STORY.If you present to ANYONE on that

big long list we went over- you need to have a PITCH.

If you write it down and you practice it and you get other people’s input (ouch,sometimes) you will eventually get your PITCH.

So that Pitch again, what exactly is it?MAGICAL FORMULA- a family

secret is revealed…

ONE PART FACTS AND FIGURES AND TWO PARTS YOU!

The Pitch sells the Deal (technical term for the MONEY)The Pitch is a summary of these

elements:– WHO YOU ARE? What is your experience

and background?– Why you are interested in this business– What is your Business Plan?– How did you research it?– What do you know about your success

measures (the market, sales potential,etc.)

The Pitch sells the Deal What do your projected financials look like?

These must be realistic and include your assumptions. You don’t necessarily have to prepare these yourself- get help if you need to but KNOW YOUR NUMBERS.This trips up lots of folks. What sources-equity,leverage (loans) do you need?Balance sheet and P&L documents.

What will their MONEY (Loan, Investment,etc.) pay for? Is it Working Capital- money to keep the business going? Is it to purchase equipment? What is it going to be used for? Your vacation probably won’t fly………..

The Pitch Sells the Deal

How much money have you invested yourself? Don’t forget to include credit card funding and other ways you have put your own funds in it? Are you using a home computer,etc. All of these are important to your lender/investor. The more you are “personally invested” the more they feel you will try to succeed.This is your EQUITY.


Be sure to have (or get) a good grounding in your financial fundamentals.

Come prepared. Have with you:– Personal Financial Statements– Personal Tax Returns (3 years)– Source/Amount of your Equity– Credit Score (if you know it- if not, you

can get it off the Internet or from a credit bureau)


Backgrounds or bios of the key Partners and Owners (this often overcomes inexperience)

Bios of key advisors- your CPA, lawyer,etc.

Any relevant partnership agreements, LLC documents,etc.

Key customer contracts if you have them


Just providing all of this background information can be daunting but IS WELL WORTH IT!

If you are dealing with a private investor, make sure that they sign a Confidentiality Agreement (templates available on the Internet or at a Staples)

You will provide the info anyway, but having it up front answers a ton of questions


Sounds SO simple, but PLEASE PLEASE make it neat, professional, NO TYPOS!, and complete.

KNOW IT COLD (remember you may only get one shot)

Keep it focusedWear your best clothes (again,

sounds silly but so MANY people miss this)


Take a copy for you, your Partner (or whoever may be with you) and two copies for the banker, lender, family member (yes, even give your Aunt Barbara a full Pitch)

Present it slowly and with confidence. Remember, the investor, family member, lender, whoever does NOT know what you know about your PLAN!

The Pitch Sells the DealPoint out any shortcomings you may have:

– Inexperience in the market you are focused on- this CAN be overcome

– Lack of experience running a company- okay too if you admit it- most entrepreneurs have to start sometime

– No credit, poor credit, etc.– Lack of education– All of these and any other shortcomings can be

turned around and presented as powerful personal motivators.

IF YOU POINT OUT YOUR OWN WEAKNESSES YOU TAKE AWAY A LOT OF THE STRESS FROM THE MEETING! Trust me, I KNOW!


Talk about how you are overcoming your weaknesses– Educating yourself if your experience

is lacking (books, Internet, personal experience with those who are in the industry,seminars)

– Depending on advisors to help you learn and grow

– Repairing your credit if that applies to you- what steps you are taking….


Smile, be confident, sit back quietly when you are done and ask for FEEDBACK and QUESTIONS.

BREATHE AND JUST BE QUIET!

Sounds good, but what if I hear NO?Starting premise here…YOU WILL

HEAR NO. Or more politely said, “ You are too ‘early stage’ for my investment criteria” or “You don’t have two years W2 or 1099 or tax returns”.”You don’t have enough experience…” blah, blah, blah….

IF I HAD TWO YEARS RETURNS I WOULDN”T NEED THEM (that is what you are secretly thinking.)

So, NOW WHAT?Smile (again), thank them for their input

and feedback, walk out and don’t kick the dog when you get home. These meetings are the stuff of my Mother’s “character building experiences….” I don’t like them either but they are part of the process and as long as you grow from them…WALLA, the PITCH gets better next time.

AND THE PITCH SELLS THE DEALJust start looking for another resource.

AND, MOST IMPORTANTLY, think specifically about their feedback and incorporate it in your PITCH.

So, Now what?

Step back, reflect on the meeting. Be completely totally HONEST with yourself.

Where did you stumble?What question came out of left

field?What did you do REALLY WELL?What did they respond best to?

So, now WHAT?

Go PITCH the next person…And the next person…….And the next personGet help for the next person- talk to

everyone you know and someone somewhere among all of these sources WILL see your vision and you will get funded.

Thank you

Thanks for listeningGood luck and get a card from

everyone here (if you don’t have a card- MAKE ONE)

Networking is our NUMBER ONE funding and business source

Now, what are your questions?