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Article Title: How Do You Know When It�s Time to Seek Financing For Your Business?
Author: Alan Guinn
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It May Be Time for a �Meet and Greet.�
When we planned to write this article, we thought�business owners can be very skeptical these days. Why would anyone think that someone who owns a business doesn�t know a good time to seek financing for the business? Because the chances are, you won�t. Sorry to burst your bubble. Although the common sense answer, �When I don�t have enough money to do what needs to be done for the business,� is often applied to this question, it may not be the right answer for your business or your business needs.
Oft times, in working with our Consulting clients around the world, we find that the correct answer to that question might actually be, �Time to seek financing when you need the money the least.� And unfortunately, many business owners don�t realize they should be laying the groundwork before they need the money.
Prior to deciding that logic defies that answer, consider that lenders and investors often find themselves looking at desperately developed business plans. They see financials that demonstrate declining cash balances. They may see sales tumbling, and pre-tax revenues declining at a precipitous rate�especially if controllable expenses aren�t maintained at an acceptable level.
Is this the type of business you�d want to finance, if you were a lender looking for a solid lending opportunity? Probably not. You might opt for what is said to be, colloquially, �behind door # 3��a reference to the television Game Show, The Price is Right�financing something you know little about. You might even decide your chances with a lesser known investment are better than they would be with the business package put before you for review.
We love meeting with, and talking to, bank officers. Especially when we have a strong positive balance in all my accounts and everything is going well with my business. Bankers are always so encouraging, it seems, until you get to the real nitty-gritty of your business. Anecdotally, we still remember meeting a Bank Manager who considered me an amazing person until about 15 minutes into the conversation, when he said, �Mr. Guinn, your client�s business owes me several hundred thousand dollars and is overdrawn in its current account. How do you intend to repay what it owes?� Hint: If you need money, don�t count on getting it when you need it. If so, plan on paying a grievous price to get it.
So, let�s assume you own a business and you�re doing well. Quite well, by today�s business standards, anyway. It�s probably past time for you to establish a relationship with some type of financial entity. We won�t say a bank, because more and more ventures are being financed by non-traditional sources. There is the private equity market, there is a very healthy debt market, and there is a growing source list of angel investors who find that putting their own money into other profitable ventures meets and exceeds their personal investment goals. When banks are advertising CDs at 1 � percent, it doesn�t take much return for one to realize that more can be achieved through some type of alternative program. The issue still remains, however�how should you approach a potential financial source?
We�d like to suggest three things.
a) Make an appointment in advance, and go in�prepared--to make a small presentation to the potential financier about who you are, what you do, and the some of the results you�ve been successful in achieving, to date. This means that you write an introductory email or letter asking for the meeting, and you prepare accordingly. Finding out who will be at the meeting, if others will be included, is a great way to set your objectives for preparation. The relationships you wish to establish and the opportunities that you seek by doing so will clearly define the amount of preparation you will do for this �meet and greet.� We have a standard �Fact Package� about our Consultancy that can be used for anyone, anywhere, who does not understand who we are, or what we do. An accompanying PowerPoint Presentation can be presented where required. You should invest between two and three hours of your time and prepare this, this week. Don�t continue to put it off. If you have what we�ve called a �Fact Package,� it is probably time to update it. If you don�t have something like this available, and you are running a business, you�re being derelict in a significant responsibility to your business. Understand, please, that this doesn�t go into deep information on the company�it simply tells the story about how you got started, what you specialize in doing, offers some of the larger situations with which you have been associated, and tells some of the current �projects in process.�
b) You will want to focus the �Meet and Greet� on what you perceive as industry upsides where they exist. Where possible, integrate specific examples of your successes which are on point into the industry�s upsides. The more �straight lines� you can draw from mainstream media accounts or articles that you can furnish as supporting material, the better for you. It offers reinforcement that the pathway you�ve chosen for your business is correct and mainstream media supporting your documentation solidifies your choices.
c) Finally, drive the �Meet and Greet� with a great dose of what is called Executive Storytelling. �Paint� a vision, verbally, for the attendees. Tell them where you intend to take the business. Share anecdotal examples�the more memorable, the better. Be sure they understand the �reason� for the pathways you have chosen. Now isn�t the time for �the ask.� The ask comes later. Today�s objective is to educate a potential financial source as to what you�re doing and why your vision of the growth of the business is correct. By doing so, you impress the potential financial source as to your knowledge, your competency, and your vision. All of these play prominently in whether or not a lending source will find favor in the future�when you are ready for �the ask.�
It goes without saying that you ask for questions at the end of the meeting, and be sure to leave several of your business cards. Nothing may ever come from the meeting. Then again, you may get several calls from others who can benefit from your experience and can learn from your knowledge. And a call from a potential financial source, asking if you ever considered any funding for your program. Ca Ching!
If you own a business, and need help with achieving the first three steps, let us know. We�re happy to help you.
About The Author: Dr. Brent Lundell owns
http://www.GainStreamGroup.com, a venture capital sourcing and consulting company, and is a partner in The Guinn Consultancy Group, Inc. The Guinn Consultancy Group provides a wide array of business services, including seminars, webinars, and venture capital sourcing services. See the group website at
www.theguinnconsultancygroup.com or contact them for additional information at
800-335-9269.
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