Business

Five Questions Money Seeking Businesses Must Answer

If you are among the entrepreneurs wishing to grow or start a business with the help of other people’s money (investors, banks, firms, or grants) you must be able to answer the five following questions briefly, concisely, clearly, and compellingly. These questions help your potential financier assess risk and potential reward.

  1. How do you, or will you, make money?Multiple revenue streams are better because variety allows the company to stay afloat even if some products or services fail or take longer to succeed or cost most to develop and deliver than anticipated.
  2. How much money do you wish to raise or borrow?Company founders often assume that business is intuitive and easy. Nothing could be farther from the truth. Startup businesses are so fragile that a single miscalculation can be fatal. Common errors are not raising enough capital, over spending, hiring and corporate structure errors.
  3. What will you do with the investment or loan amount? 

    Do you need the investment for marketing, manufacturing, legal expenses, or operational expenses (overhead items like office, staff, equipment).

  4. How will you pay back the money and when, or how will the investor earn a return?This is really the most important question and should be the focus of your presentation and numbers.
  5. What experience do you and your management team have in this industry and with prior investor’s money or loans?Most entrepreneurs are not able to think like investors and avoid the common errors. Position your team as experts, specialists, and the company’s sales team as well as leadership.

Give compelling answers to the questions above and greatly increase your chances for funding! Questions? Email Mike Will Downey.

 

How to Reach the Venture Capital Funded One Percent

A very small percentage of founders meet venture capital (VC) criteria for relevant management experience. Hence, why VC’s claim they invest in 1/100 deals. Reaching the funded “one percent” in VC requires quite a bit of work. A deft combination of leadership, creativity, innovation, contribution, and inspiration is necessary.

Venture capitalists dirty little secret is that a business plan presentation contains many subliminal clues that reveal the sophistication and experience of the management team.

The most common error is “we only need 1% of the market to be successful”. This clue and others can be fatal mistakes.

Most startup businesses need experienced assistance, most founders do not have required skills. VCs occassionally take a chance on first time founders. Often though they replace them with experienced CEOs. Sometimes, VCs will bring an experienced CEO into startup companies as a condition for funding.

Incubators, job coaches, finders, mentors, and angels rarely work.

10% of startups have a winning idea. 1% of startups have winning idea and winning management.

Many companies fail because they make avoidable mistakes.

Companies and consultants like 5IV0 and Venture Management Company help companies avoid the fatal mistakes.

We want companies with compassion and passion for humans working together.

Get into the one percent!

Nine Steps to a Successful Business Plan Presentation Outline

Follow the outline below as closely as possible — not necessarily the sequence, but cover all the topics. Answer the most meaningful questions in the outline–not necessarily every one.

Add information you feel is important even if it is not in the outline. Try to allocate about the same amount of time to each topic in the outline.

Don’t get bogged down trying to describe products or technologies–if the risk exists, just talk about what the technology is used for. Try to answer the questions in the outline crisply and directly.  No time for long explanations.  You can elaborate later.

Don’t exaggerate.Be as factual as possible.  Be prepared to defend any claims you make if possible. Quantify claims whenever possible.  (Don’t say, “we’re going to make the best widget in the industry.”  Say, “our widget will have 200% more performance than existing widgets and it will cost 30% less.”)

If you don’t know the answer to an important question, don’t be afraid to say so.  No one expects you to have all the answers at this stage.  (“One of the reasons we need some money is so we can answer that question.”)

Don’t use busy charts.  It takes too long to explain them.  You have a little over one minute for each major topic.  A good format would be to have nine charts with simple reminder phrases for each of the important topics to be addressed on each.

Use graphics, pictures, charts, graphs, etc. if they will dramatize a point.  But make sure they are simple and easy to understand.  Explain the graphics carefully if necessary.

Keep asking yourself, “Would I invest in this business?  Why?”  The audience is interested in the investment promise of your business–not the technology.

Don’t try to say everything in your presentation.  It is just an “attention getter”.  You can explain the details later, assuming you succeed in creating some interest. 

1. Opportunity 

Summarize why you think there is an opportunity to build a new, successful company.  Why is this an exciting opportunity?  Why is it an exciting investment opportunity?  What kind of value might the company have in the future?  If you aren’t sure how to value the company in the future, use 1 x annual sales in the fifth year and 15 or 20 x net profits in the fifth year as reasonable estimates. Describe any other factors that make this an exciting opportunity.

2. History and Background

What is your background and previous experience.  Where did the idea for the company come from?  How did you get involved with the company.  When did the company begin operations?  What exactly does the company do? What is your long term vision for the company?  How has it been funded to date?  Where does it stand today?

3. Products and / or Technology

What, specifically, are the company’s products and what, if any, proprietary technologies are used to make them?  What do the products do?  What makes the products unique or special?  In general, how are they better than other products or alternative methods of solving the problem?  Why would the customer buy these products?  How much better are they than other solutions?  Can we demonstrate that they are cost effective?  Are there patents?  If so, what, specifically, to they protect?  Why will they be of value to the company?

4. Markets

What specific problem do the products solve?  For whom?  That is, who, specifically is the customer?  Why is the problem important?  Why will the customer buy our product?  How do we know the customer will buy?  How do we know the price the customer will pay for our product?  How large is the specific (narrowly defined) market for our product?  What growth is expected in this market?  How do you know the market exists?  How do you know customers will pay your price?

5. Competition

How else can the customer solve the problem our products solve?  What are the alternatives?  How do we compare to each?  Why are we better?  In what ways are we worse?  Who are the vendors of these other solutions?  How do they compete with each other?  Where will we fit into the industry?  Why will we be able to compete effectively against them for the next ten years?  Why are we confident that no new entrant will come along with a better solution and blow us away?  Why do you think you can dominate your market niche?

6. Management

Who is presently involved in managing the company?  What are their credentials?  Why are their backgrounds relevant to building this business?  Why will they be able to build a successful company?  If not all management spots are filled, what is the plan for filling them?  What kind of people are you seeking?  To fill what roles?  If you do not expect to be the CEO that builds the business to $10 or 20 million, what kind of person would you bring in?  When?  Who is on your board of directors?  How does the board function?

7. Business Strategy

What are the important strategies for building the business?  What kind of business will it be?  (manufacturing, service, distribution, software, combination?)  What is the business model?  (i.e. what will produce the company’s revenue?  What kind of gross margins will the company have?  What expense levels are required to run the business?  What level of operating profit can the business generate?)  Do you have any corporate partnerships in place?  Do you plan to put any in place?  What channels of distribution will you use to deliver your products to your customers?  How will these channels be established?  By whom?  When?  What are the significant risks to your business?

8. Manufacturing

What special issues relate to manufacturing the product(s)?  Any special materials or processes?  Any proprietary process?  What special equipment or facilities are required?  What investment is required to set up manufacturing?  For what capacity?  How do you know you can manufacture the product at a cost that will yield acceptable gross margins?

9. Finances

What kind of revenues can the business produce, on an annual basis, over the next five years?  Profits?  What investment is required to carry the company to the next major level of valuation?  What specific tasks need to be accomplished to do that?  How long will it take? (Try to identify a “next level” that can be achieved in less than 18 months.)  What investment will be required beyond that?  To the extent possible, explain key assumptions behind your forecast.  And make sure the forecast relates in a logical way to the market forecasts you described previously.  How will the investor get his money back?  Through an IPO?  Acquisition?  When?

A Nine Step Plan For Success, Money, Faith, Health

Excelling in life is difficult. You really have to own it. 5IV0 has developed this easy nine step plan for success, money, faith, and more health:

1. Self eval

Check your identity. Take inventory. What’s your self evaluation? Describe your best attributes. Write down something in your personal history or background that is a source of pride. Unload some baggage. Live up to your own expectations. Admit mistakes and ask God for forgiveness. Forgive yourself.

2. Create Your Vision

An African Proverb so nicely put ‘Not through height does one see the moon’. Who you are is what fulfills you and fulfills the vision you have of the world. What gives meaning and joy to your life? What excites you? What do you look forward to doing more than anything else for the rest of your life? Tap into your imagination.

3. Set Goals.

Write down things you can do that will bring you closer to your goals for personal life, career, and community. Well thought out, good decisions open opportunities. Don’t allow yourself to be distracted from the truly important things in your journey. Goals must be meaningful, well defined, exciting, realistic, and fine tuning along the way.  Put on blinders and stay focused on your goals.

4. Solve problems.

It was Al Einstein that explained our problems can’t be solved at the same level of thinking as we were when we created them.

5. Master the Rules of the Road

Keep focused on the people and principles that are important to you. Be honest. Do the work that is required. Do what you say you will do. Listen without judgement. Pay what you owe when it is due. Act honorably even the face of temptation or criticism. Be a source of strength. Maintain a positive attitude. Take the time to think things through. Look at the big picture.

6. Find Guides

No one makes it alone. Grow your support team. Be the host, not the guest in the relationship. Pay attention to details. Align yourself with common values and expectations. Honor all commitments, both spoken and unspoken, to your mentors and co-workers.

7. Make lists

Put together lifetime, yearly, quarterly, weekly, and daily activity lists. Weekly calendar is great. What do you want to leave behind as your legacy? Don’t procrastinate, be proactive!

8. Step into the Outer Limits

Fury is your natural enemy. It will clot your blood, clog your pores, and blind you. Take risks to overcome fear and missed opportunities. Keep faith. Believe. Increase your self awareness so that you are in control of emotions and feelings that may have held you back in the past. Don’t feel guilty about saying no. Be curious about life and all it has to offer.

9. Enjoy the journey

Let people know where you stand, loudly and proudly, but never look down upon others. Take well calculated risks by changing your approach. Everyday do something that is truly important in moving you towards your goals.

 

The Way of the Business Warrior

We came up with this in 2012 and called it Mega DOJO as an idea of an inspirational, pep rally type corporate training company. Here’s our quick list of 72 Ways of the Business Warrior.

  1. Control your lifestyle.
  2. Always ask. WHY?
  3. Respond, don’t react.
  4. Remove emotion, the enemy of Logic.
  5. You Are As You Think. Stay Balanced.
  6. Cut Through the Crap. Get to the Point.
  7. Check for negativity and ego. Drop it.
  8. Be objective in your thinking.
  9. Make decisions based on those around you, as opposed to what you think or want at the moment.
  10. Channel emotions into arts.
  11. Have patience.
  12. Be an all-around good human being.
  13. Plan to win and work the plan.
  14. Figure out the how and do it.
  15. Pay extreme attention to details.
  16. Use foresight and think strategically.
  17. Set clear expectations up front.
  18. Play no games and take no short cuts.
  19. Seek chemistry and loyalty.
  20. Follow structure and processes.
  21. Respond to others in timely manner.
  22. Strive to improve.
  23. Accept constructive feedback.
  24. Work hard and work intelligently.
  25. Support our team.
  26. Have elite confidence.
  27. Set and meet deadlines.
  28. Communicate effectively.
  29. Keep your assets organized.
  30. A Positive Attitude = Happiness.
  31. Worry about what you can change.
  32. Everything is a learning experience.
  33. Stay humble and give back.
  34. Somebody has it worse than you.
  35. BE PROACTIVE and take action.
  36. Don’t talk about the past.
  1. Be self-motivated and have a thirst for knowledge.
  2. Evolve, create, and change.
  3. Seek greater good.
  4. Don’t get over excited for no reason.
  5. When in doubt, shut your mouth.
  6. Break habits.
  7. Always be pitching, and closing.
  8. Find creative solutions.
  9. Create return on investment.
  10. Track your time.
  11. Cultivate excellent relationships.
  12. Rank your opportunities.
  13. Clean up your language.
  14. Reach higher.
  15. Eliminate chaos.
  16. Follow chain of command.
  17. Reduce friction between people and don’t a bully.
  18. Be productive.
  19. Talk future, don’t daydream & be Realistic.
  20. Time and attention are most important resources.
  21. Don’t believe every thought you have.
  22. Pimp your biggest strengths.
  23. Keep it real.
  24. Maintain integrity and a strong reputation.
  25. Don’t take anything personal.
  26. Achieve flow.
  27. Talk. Talk. Talk. The right way.
  28. Find the right team. Communicate.
  29. Tighten Up your delivery and professionalism everyday.
  30. Eliminate excuses.
  31. Focus on the task at hand.
  32. Get in where you fit in.
  33. Take yourself out of your comfort zone.
  34. Be great at self analysis.
  35. Stay dedicated to our team and our goal.
  36. Stay in our lane.