Whenever its possible, I tell first-time entrepreneurs to bootstrap their own business ideas. If you want to be an entrepreneur, create something you can sell as soon as possible and start selling. That, or find an existing product to flip. Either way, there’s nothing that can replace the in-the-trenches experience of getting out there and selling to the masses.
Still, there are certain ideas that can only become a reality with investor funding. Or maybe you have a product or service that’s humming along, but you’re hoping to accelerate your growth with the insight, mentorship or funding from an industry expert.
I’ve been pitched before on several different business ideas and said no to almost all of them, but some of those “yeses” that worked out have led to great opportunities both for the businesses I’ve invested in and for me. Plus, I started my first few businesses with the help of my mentor-turned-investor Jim Franco, so I’ve certainly benefited from these kinds of partnerships myself.
That’s why today I want to give you my best advice on how to pitch your business, product, service or idea to industry experts, based on my experience sitting on both sides of the table.
Know the risks
First of all, understand that partnerships of any kind are a huge risk. If you’re going to start any kind of long-term partnership with your investor, you need to be crystal clear on the roles and responsibilities of every party involved.
In fact, in almost every case I can think of, I would recommend asking your investors/mentors/partners for a one-time loan which you promise to pay back with interest. And if they want equity, give them enough to have a solid payout, but not enough where they can claim significant ownership.
At the end of the day, you need to protect your position as the visionary for your business. You can accept help from others and still be the ultimate decision-maker. That’s what you must do an entrepreneur, and the higher status or greater available funds of your mentor/investor doesn’t change that.
Don’t let the fear of failure fool you into thinking they will be the “man on the white horse” who will save your business when things get shaky. That’s your responsibility. Whatever adversities or failures show up on the road to success are there to teach you, and you’re robbing yourself of experience if you don’t charge in and face them yourself.
Build a relationship first
Have I given you enough of a warning yet? If you’re still interested in pursuing an industry expert to be your investor or mentor, understand that you’re playing the long game. It’s extremely rare for a starting entrepreneur to approach an expert and win her over with just one pitch meeting.
In fact, if you do get the chance to speak with an expert, you absolutely should not lead with a pitch! That will immediately set the tone for a transactional relationship. You don’t want that, because there’s no way you can afford to buy out the expert just yet.
Instead, focus on building a genuine relationship with experts first. Once you get their attention, ask them how you can help them and don’t expect anything in return. Better yet, do your research ahead of time, find out what they need and give that to them before they can even ask for it. That will put you in an entirely different category than the thousands of clueless wannabes and beginners who bombard them with pitches every day.
For example, I had one guy approach me out of the blue and say, “Hey Bedros, I’m an Instagram growth hacker and I noticed your official Instagram account for Fit Body Boot Camp could use a lot more followers. If you could give me access to it, I’ll grow your following for free.”
Sure enough, he brought us a ton of new followers on that account, and now he’s helping us out on several different paid projects. Because he proved himself first and came to me with a giving hand, I’m happy to keep giving him bigger and better opportunities.
Prove you can connect with future buyers
This is a true masterstroke when it comes to pitching. If you can show your potential investor or mentor that you already have an audience of qualified prospects who are eager to buy, it becomes almost impossible for them to tell you “no.”
One of the most amazing examples of this I’ve ever seen comes from Jesse Itzler, who was kind enough to share this story on a recent episode of my podcast. When he was first creating his concept for Marquis Jet, he and his partners sat down and came up with everything they would want from a private jet service and put that into a business plan. Then, since they didn’t have any jets and didn’t have the money to buy their own jets, they looked around for who they could pitch this idea to.
They settled on the “800-pound gorilla,” which was Warren Buffet’s NetJets, which had the largest fleet of private jets in the world. At the first pitch meeting, the CEO told them “absolutely no way,” but then his partner came running out after them and told them he’d get them a second chance.
At the second pitch meeting, Itzler and his partners brought in a focus group of eight potential prospects for Marquis jet, including Run from Run DMC, a professional athlete, and a powerful female real-estate mogul. One by one, all eight of them stood up and explained why they would never bother buying a traditional fraction with NetJets, but they would absolutely buy a jet card through Marquis Jets. Itzler and his partners ended up closing the deal and doing several billion dollars in business before selling the company.
At the end of the day, closing an investor or mentor on your idea comes down to the same basic need you have to answer when selling to a client or customer: You have to create certainty that what you have to offer will work. There’s no better way to create certainty than to present a dramatic demonstration of proof right there in front of them. Seek out ways to create dramatic demonstrations like this, and you will attract the people you need to build your empire.
This article was originally posted here on Entrepreneur.com.
Put On Your Wellies: It’s Time To Wade Into Risk
Entrepreneurs aren’t all leaping into the unknown like lemmings off a cliff, but they do need to consider it…
You’ve had a great idea. You’ve looked into its development. You’ve recognised that it has potential beyond just what Auntie Mabel and Mike From The Grocer think. And you’ve clearly nailed a pain point that can make money. Now it is time to take the risk of running with it.
Every big idea comes with risk. You can’t step out into the world of entrepreneurial thinking and business development without it. Your idea may fail. It will also be time consuming, demanding, hungry for money, and hard work. It is unrealistic to expect that your project will leap out into the world and be an unmitigated success.
It is also unrealistic to assume that it isn’t worth taking this risk.
There are steps that you can follow to ensure that your risk is managed so you aren’t blindly leaping off that cliff…
Step 01: Do your research
No, canvassing your neighbours, friends and family is not doing research. You need to know that your idea will appeal to a broad market and that it will have significant legs. This may sound like daft advice, but you would be surprised how many people think an idea will take off just because Susan in Accounting said so.
Step 02: Understand the costs
Projects are hungry for money and investment. Realistically work out your budgets and how much it will cost to take your project off the ground and then stick to it.
A calculated risk is a far better bet than one that shoots from the hip and hopes for the best. You can also use this as an opportunity to draw a clear line under where you will stop investing and end the project. If it keeps eating money and isn’t getting anywhere with results you need to be able to walk away.
Step 03: Know when to walk away
As mentioned before, this can be defined by a line you’ve drawn in the proverbial sand (and budget) but no matter where you draw this line, you have to stick to it. Often, when time, money and energy have been poured into a project it can be incredibly hard to walk away.
You think ‘but I have put so much into this, just one more’ and then it gets to a point where the ‘just one more’ has taken you so far down the line that walking away feels impossible. Leave. Learn the lessons. Apply them to your next project.
Mind The Gap
The entrepreneur’s guide to finding the gaps and building the right solutions.
Innovation may very well be the key to business success but finding the gap into which your innovative thinking can fit is often a lot harder than people realise. Some may be struck by inspiration in the shower, others by that moment of blinding insight in a meeting, however, for most people finding that big idea isn’t that simple. They want to be an entrepreneur and start their own high-growth business, but they need some ideas on how to find that big idea.
Here are five…
It sounds trite but networking is actually an excellent way of picking up on patterns and trends in conversation and business problems. The trick is to note them down and pay attention. Soon, you will find patterns emerging and ideas forming.
2. Look for pain
Just as networking can reveal trends in the market, so can spending time reading. The latter will also help you find common business pain points. These are the touchpoints that frustrate people, annoy business owners, affect productivity, or impact employee engagement.
Be the Panado that fixes these pains.
This is probably the most annoying of the ideas, but it is unfortunately (or fortunately) very true. Luck does play a role in helping you capture that big idea. However, luck isn’t just standing around and random people offering you opportunities. Luck is found at networking events, it is found in research and it is found in conversations with other entrepreneurs.
4. Luck needs courage
You may have found the big idea through your network, a pain point or pure blind luck, but if you don’t have the courage to take it and run with it, you will lose it to someone else.
Being bold in business is highly underrated because most people assume that everyone is bold and prepared to take big leaps into the unknown. However, not all brilliant entrepreneurs were ready to throw their family funds to the wind and leap into an idea – they were courageous enough to figure out a way of harnessing their ideas realistically.
5. Pay attention
This is probably one of the most vital ways of finding a gap in the market. Often, people are so busy that they don’t really pay attention to that niggling issue that always bothers them on a commute, or in a mall, or at a meeting. This niggling issue could very well be the next big business opportunity. Pay attention to it and find out if that issue can be solved with your innovative thinking.
5 Things To Know About Your “Toddler” Business
As you navigate this new toddler phase of your business, here are five things to bear in mind.
Ah, toddlers. Those irresistible bundles of joy bring a huge amount of energy, curiosity and fun to any family – but there’s also frustration and worry that comes with their unpredictability, as they grow and start to become more independent. If you own a business and it’s successfully past its “infancy” of the first year or so, it’s likely it will also go through a toddler stage of its lifecycle.
Pete Hammond, founder of luxury safari company SafariScapes, agrees with this. “Our business is now three and a half years old, and we’ve found that we’re not yet big enough to justify employing a large team of people to handle the day-to-day admin tasks, yet we still need to grow the business as well,” he says. “As a result, our main challenge is finding the time to step back and see the bigger picture. Kind of like when you are raising a busy toddler and you spend most of your time running after them!”
As you navigate this new toddler phase of your business, here are five things to bear in mind:
1. This too shall pass
Everything in life is temporary – and that goes for both the good and the bad. It’s as helpful to remember this when you’re facing the might of a toddler temper tantrum, as it is when you’re facing throws of uncertainty in your business. If your new(ish) venture is going through a rough patch in its first few years, it can be easy to think about giving up – but don’t. As long as you have an overall big idea that you believe can add value to your customers, keep pushing through the rough parts until you come out the other side.
2. Appreciate what this phase brings
The toddler years mean that the initial newborn joy is officially behind you. But these small humans also bring their own kinds of joy, as you watch them learn new skills, say funny things, and give affection back to you. While your two-year-old business may not hold the same exhilaration for you as it did during those first few months, there are now different things to appreciate about it: Maybe you’re expanding your product range, or employing new people who can take the workload off you.
3. Establish boundaries
Toddlers thrive on boundary and routine – and your toddler business will too. As it grows into a new phase, try and establish limits in terms of the type of clients you want to work with and the type of work you’ll do. It’s also a good idea to make a decision about the hours you’ll work and when you’ll switch off, which will help you establish a good work-life balance.
4. Take a break
Every parent with a toddler needs a break every now and then, even if that means a walk around the block (on your own!), a dinner out with friends, or even a few days away. The same is true for a demanding small business: every so often, remember to take time out to rest properly, where you switch off your laptop and completely unplug. You’ll return much more inspired and resilient to deal with the everyday uncertainty that it brings.
5. Give it space to make mistakes
While the unpredictability of a young business can be stressful and tiring, it’s also a time for trying new things without the risk of huge consequences if they don’t quite work. After all, it’s much simpler to change your USP if you’re a small business employing a few people, rather than a big company where 50 people are relying on you for their salary, or where you’ve received a huge amount of investment capital. While you may fail in some of the things you try with your business (in fact, this is almost guaranteed), see it as a toddler that’s resilient enough to pick itself up, dust its knees and keep moving forward.
During this phase of business growth it’s also essential to have the right type of medical aid cover. There are medical schemes such as Fedhealth which has a number of medical aid options and value-added benefits to ensure that your health and wellness is taken care of too. After all, the healthier you and your staff are, the more productive your business will be – during the toddler (business) stage and beyond.
While this phase can be frustrating, it’s a sign that your business is growing and adapting, rather than remaining in its infancy, and that can only be a good thing! So embrace the difficulties, learn from them, and watch as your business strides forward confidently into the next exciting phase.