The past several weeks I have been updating and revamping my
management company’s feasibility study, in a way that will allow for some of
the critical data to be included in the final business planning and better
convey to the potential investor(s) how they will profit from their equity
portion in the business. Over the past two years I have found some great
resources for identifying and understanding which aspects of a persons’ company
are the most appealing to an investor as well as which elements are the most
important when pitching the business’s ideas and financial structures to others
that could help grow the business. Some specific resources are: The
Small Business Administration, Roxanna
Webber’s Blog and Forbs
Magazine’s professional sections on what investors are looking for in a pitch.
Recently, I had the opportunity to study some of the Reid Hoffman methods
for investing in and obtaining funding for new businesses and start-ups. Some
of Mr. Hoffman’s ideas have truly changed the way I view building and pitching
new company models to others. These new approaches are simple, yet quite
valuable to anyone looking to gain funding for their own venture; after all,
the main goal of showing a potential investor how a person’s plans on making
money is to give the investor a more clear idea of how his or her money can
better work for them by giving the entrepreneur a portion of it to start or
grow their business.
Mr. Hoffman says, “Poor
planning often is the death of great ideas”. Being clear on how it is that
the company will make money and how easily an investor can recoup their initial
portions is absolutely one aspect of my own personal planning on which I will
spend a great deal of time.
Some specific changes that I have made thus far, that I’m
hoping will help others reading this blog include:
- Spending more time explaining how and why my company is relevant and making sure the investor can clearly see how and why they will profit from the joint venture.
- More clearly explaining the overall state of the market and ability to learn and grow from its past mistakes in the future, as well as briefly spending time on how newly forming trends will help propel the business through its developing stages.
- Describing, in detail, which are the target consumers of the company’s services are, as well as who the target customers are for what the company develops in these emerging projects.
- Describe which companies or individuals are in direct competition with the company’s business model, how to overcome those obstacles with a more modern up to date approach, and most importantly how to become strategic partners with those other entities that would normally be considered direct or indirect competition to the business.
- Simply and clearly showing how the low overhead and duplication process in the company structure will show greater long-term profits without having to over extend the list of projects at any given time. This will not only solicit the help of the potential investor in the scheduling of which projects will be released in the future but will also help the company grow by getting the knowledge of a veteran in the financial and investment industry.
Though each of these aspects all work hand in hand with the
ability to convey the ideas and profit potential of the company, I feel that
being simple in the explanation of what the company actually does in the
industry, in conjunction with clearly explaining why my business’s approach to
working with artists is more unique and mutually beneficial to other
professionals, will more than educate the investor on what the business is and
how it will profit for them in the near future. After all, investors are in the
business of making money on the great ideas and hard work of others. If a
person can clearly and easily show the investor how they will profit without a
ton of their own input or confusion, this will prove to be one of the deciding
factors and most important aspects of what is being pitched to the potential
backer.
