No matter who you are or what your experience, starting a business is a nerve-wracking process. The true beginning of a new entity – a start-up – is the germ of an idea that keeps you up at night (like right now!); distracts you at work; monopolizes conversations with friends and family; gives energy, inspiration and hope. It builds from an idea to a research project; it is only natural, and absolutely necessary, to immerse oneself in the topic – reading everything, talking to other professionals. A budding entrepreneur has to seek a place in the market that is meant for him or her to fill.
That is me.
There are three main hurdles that the average person will typically face when starting a business. Some people may not be hindered by all three but at least one will be an issue to some degree.
- Technical knowledge
One of the most common pieces of advice that entrepreneurs are given is to gain two years of work experience in their intended industry before going into business for ourselves. There’s nothing wrong with that, per se. “Experience is a good teacher.” But I would argue that having a “job” in the field doesn’t in and of itself mean that a person has gained the skills, knowledge base or fortitude needed to start and run their own business. What if a person has no desire to be an employee and wants to go directly into entrepreneurship? There is another way, and that is by leveraging the experience of others.
Entrepreneurs are also often advised to build a team, or “board of advisors,” no matter how much experience. The ability to connect with the right people who have the skills, knowledge, experience and willingness to help achieve the person’s vision is fundamental. I learned this back in 2005 when I entered the annual business plan competition at the Brooklyn Library for the same business I am building now. Many years later (for reasons beyond the scope of this blog) I attended graduate school to gain the “book knowledge” on the industry that I was lacking.
I have a very curious, expressive, detail-oriented, and – I’d like believe – humble character. So seeking the counsel of many others is my thing. Over the years I have gone out of my way to be around people in my industry. If I wasn’t seeking advice I was taking it. I leave no stone unturned (I don’t think…) I’ve traveled hundreds of miles to expensive conferences, attended local events, taken trains two or more states away many times for parties, seminars and speeches hosted by industry groups and organizations. A couple of years ago I had two advisors through the SCORE program with the Small Business Administration (that’s a whole other blog post.) In October 2017 I am going to a conference in Barbados.
The goal had always been to make connections that will become fruitful when the right opportunity presented itself. But now my goal is very specific: to build my team. I’ve been having some success lately via LinkedIn. Recently I met someone who seems to have all four of the traits I’m looking for in an advisor/partner: a) have the experience I am in need of for what I want to accomplish; b) have the desire to be a mentor, providing consistent, long-term guidance; c) take me seriously; and d) isn’t needlessly condescending, presumptuous or biased. I find that the key is finding people who are hungry for change. People who are looking for an opportunity for freedom to control their destiny in a way that capitalizes on their interests and expertise. Everything seems to go back to my network marketing training! Retired professionals are a great resource. I spoke with one gentleman I met through a family connection, but he failed the test when he stated, “You don’t know what you want,” as though enquiring about his background and his perspective on market opportunities means that I’m clueless, aimlessly fishing for something to grab on to. Through LinkedIn I’ve been able to identify and contact experts in industry and academia that I probably would have had no knowledge of otherwise. It’s amazing how many highly desirable people I’ve been able to introduce myself to and how fast conversations have developed, just from this one platform. It’s really powerful and I highly recommend it.
Donald Trump has praised the power of debt. He was able to build a real estate empire by leveraging Other Peoples’ Money to a high degree. The power of OPM has become very real for me in my real estate investing business. Real estate investors depend on private and hard money lenders for property purchase and rehabilitation. It is how someone with little money of their own can begin a lucrative career in the field. But it is a skill to be cultivated.
That isn’t what I was taught. As far as I knew, if you wanted to start a business you needed to save your own money and possibly take out a bank loan. It seemed like venture capitalists and private investors were for the very sophisticated. You had to be “linked in” to a different world, or something. I had no idea that I could have access to this kind of capital and how to go about it.
Raising capital for a business doesn’t have to be torturous. It requires self-confidence, a plan with a great elevator pitch, a clear and specific ask, persistence and creativity. Below are some ideas.
- Self-confidence: The best place to start your search for investors is your immediate community: parents, family, friends, colleagues, alumni network – the people you know and the people they know. This takes courage because we all know that the people closest to us are often the ones to doubt us the most. It takes courage to face rejection, doubt and possibly thinly-veiled ridicule from the people who have the power to hurt us the most. But still, it’s better to fail than to never try.
- Plan: The best way to win people over is to have a clear plan. Clear doesn’t mean having all the details. It’s clarity of vision and idea of how you intend to bring it to reality. Be honest about what you’re not sure about but give ideas about how you plan to go about figuring it out. The point of the plan is not to have all the answers but to provide a framework for your actions and goals. Be able to articulate your idea and not allow questions or negative responses to be discouraging.
- Specify the ask: In articulating a clear plan with confidence, you have to be specific about what you are asking for. So if your desire is to raise $20,000 speak it into existence! Don’t be vague. “My team is seeking to raise $20,000 for operating costs for the next six months…” – whatever it is. “This is our first (second…third…) round of funding to support our expansion into…” Offer incentives for different levels of investment.
- Persistence: I expect to have many conversations, even speaking to the same people several times. And remember a ‘no’ can some day become a ‘yes.’ Consider no’s temporary. Keep your prospect list updated on the progress of your campaign whether they have contributed or not.
- Creativity: A battle is fought over several fronts. There’s fighting on the ground, there’s intelligence, there’s diplomacy… In your funding campaign you will also need to utilize many skills, devices and people, as well as altering the message depending on the audience. Think outside the box. You make the rules. It’s your show. Just always respect peoples’ time, be honest, be gracious and communicate well.
Raising money is another reason it is important to have a team. You have the opportunity to reach more people. If and when you do solicit an investor or venture capitalist, having a team with extensive recent knowledge and experience will bump up your credi(t)bility. *Credit being the operative word!
Today I am entering the fourth iteration of business goals, bringing with me all the lessons of past efforts. I’ve learned from my mistakes and feel much better equipped in confidence, skills, knowledge and creativity than I was before. Getting my business from idea to income-generating entity has been challenging, but I believe that God’s timing is perfect. I’ve just been preparing for my season.