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The US economy is making a very slow comeback after the longest and deepest financial disaster since the Great Depression. I have been in the trenches with the many small firms struggling to turn the corner during this difficult period. Many business owners have been able to weather the storm due to solid financial practices; however, others have struggled and are on the verge of dissolution. I have made it my business to find funding resources, and to understand how to direct those resources to the many small business owners I reach.
It seems each month during my SCORE-LA class, I have several firms who have been in business for many years, and somehow are just now really trying to understand how to market their firms. When the financial markets were well and customers held a false sense of prosperity due to highly leveraged assets, purchases flowed. The financial meltdown leading to the Great Recession has changed that free-spirited spending and now customers evaluate purchases for a true value-proposition. Sadly, too many small firms never spent the time to develop a solid business plan with integrated marketing communications strategies, so to generate revenues in this new environment is next to impossible. Each month, I work diligent to give them some hope through sharing valuable tools to begin the process of building a solid business and helping these owners understand how to track future market factors so that they are not caught off-guard in the future due to financial market fluctuations. This helps somewhat, but the next issue is that marketing is more expensive than often considered, so the owners begin looking for that magic bullet – funding. Too many small business owners hope that the debt or equity funding sources will just blindly write them a check. Unfortunately, this is not how it works.
Last evening I had the pleasure to attend the Maverick Angels networking event in Century City. It was great, so much energy in the room and a group of over 100 participants representing investors, entrepreneurs and other professionals offering solutions for each group. I fell in the latter, sharing information on an assortment of business accelerators and funding platforms.
The presentation was informative, and included the reminders of what it takes to actually secure funding for your business venture.
1. The team must demonstrate deep domain knowledge. This means if you are seeking to launch a business in the retail space, you must know the category reflecting your offerings and understand that space with a great depth of knowledge.
2. The principals must be able to deliver a one-page Executive Summary that describes the business, the market opportunity, the capital requirements, use of funds, and revenue model.
3. The business must have either a prototype or a close to market illustration of the product they are seeking to produce. They should be able to articulate how the funding being requested will contribute to a market ready product.
4. They shared that if you ask for money, you will receive advice; if you ask for advice, you will receive money. Investors want to make certain that business owners are coachable if they expect a financial investment.
5. Solid revenue model demonstrating some sales. This means proof of concept – someone has spent their dollars to purchase your product. If you are pre-launch or have not generated any revenues, then you are often too early for investors. They want you to get the product to market using friends and family first, and then prove that there is a viable market before seeking equity investors.
The Maverick Angels completed the evening by pulling business cards for an opportunity to make a 30-second pitch to the group. I was lucky enough to be selected and based upon the participant feedback nailed it!To learn more about the Maverick Angels go to: www.maverickangels.com.