In the first article on this site, I wrote "Energy can be defined as four things in this case (and in most cases): time, capital, action, and commitment.... A successful entrepreneurial enterprise needs high levels of all four components. With these investments- and a decent idea- any business can be Manifested." The time has come to address the most sensitive and mysterious of these: Capital.
I am often approached with the request, "Can you help me get some money?". My answer is, "Sure, how are you selling?" The reply is usually, "Well, I am not selling anything, but I have a great idea!" That's swell, really neat.
There is a series of articles that I will write on this point and I am here to say that I am not the authority on raising money, but I get it. I know how to do it. Let's cover the basics in this article, and we will digress after that.
The bottom line is this: If you want someone to invest money in your business, you MUST show them how they will make a RETURN on that investment.
I am now going to repeat that in many other forms. An idea is worth nothing. Revenue is worth everything. It doesn't matter how great the idea is, you have to be able to sell a product to create value. An idea creates no returns, revenue creates returns. An investor wants to make more money on their money. They do not invest in a great idea, they invest in revenue. If you can't show how you are going to create revenue, your idea is worth nothing.
OK. Now that we got that out of the way, I am betting that at least half of you don't get it yet. The single biggest problem with a start-up is the entrepreneur only builds half the business. Most entrepreneurs start-up with a passion for creation. I don't discount this. In fact, I applaud it. I don't have it. I have a passion for the other half. Taking the business to market. In order for any business to be successful, you have to be able to take it to market.
Therein lies the twist, the mystery and the key to success. In order to be successful, you don't need to have money, you need to be capable of making money. If you can demonstrate this capability, or at least show me a great plan, I can find you investment capital. Angel funds, angels, and private equity will flock to your business.
Showing posts with label capital. Show all posts
Showing posts with label capital. Show all posts
Monday, November 12, 2007
Friday, October 19, 2007
The 2nd Component of Entrepreneurial Manifestation: Time
In the first article on this site, I wrote "Energy can be defined as four things in this case (and in most cases): time, money, action, and commitment.... A successful entrepreneurial enterprise needs high levels of all four components. With these investments- and a decent idea- any business can be Manifested."
Let's talk about time. Time is the one thing that is finite. We can't make more of it. We can make more time available by a variety of time a management methods or simply by paying others to do things for you, hence "freeing" your time. We can not, however, add more time to the overall pool. Time is perhaps the only real direct, flexible expense.
The hard truth in entrepreneurship is also that you may not be able to pay someone else to do what you do. Someone with your expertise may be exceedingly difficult to find. Once you find that person, they may not be able to make the logical leaps you have to get to the right ideas. Or keep those idea secret may be part of your intellectual property. Once you solve all those problems, you could find that another person simply does not fit well in the scenario- they are the wrong person for that "seat on the bus".
Entrepreneurship will take time, and a ton of it. To best ensure the success of the venture, key personnel must be able to commit to the venture full-time. They must clear their time of other things to create as much "free time" as possible. This free time is then "occupied" by the new venture. This takes on a number of strategic advantages. First, the key personnel will not be distracted by other things. This is very important to maximize productivity within the chronological parameters. Second, you will be able to commit the most actual production time within a set quantity of hours. In other words, you will get the most work out of the most time by your key personnel. This moves the venture along as quickly as possible, which is often critical to its success. We will talk more about this when we talk about "action" in the next article.
A talk about investing time energy would not be complete without a discussion of money. Time inevitably costs money. If key personnel are worried about how their mortgage is going to be paid, they can not maximize productivity. And they must be rewarded for their innovation. Reward can be delayed with stock options, and even some salaries can be deferred, but an understanding of compensation must be agreed upon early to ensure that time can be absolutely focused on success.
Let's talk about time. Time is the one thing that is finite. We can't make more of it. We can make more time available by a variety of time a management methods or simply by paying others to do things for you, hence "freeing" your time. We can not, however, add more time to the overall pool. Time is perhaps the only real direct, flexible expense.
The hard truth in entrepreneurship is also that you may not be able to pay someone else to do what you do. Someone with your expertise may be exceedingly difficult to find. Once you find that person, they may not be able to make the logical leaps you have to get to the right ideas. Or keep those idea secret may be part of your intellectual property. Once you solve all those problems, you could find that another person simply does not fit well in the scenario- they are the wrong person for that "seat on the bus".
Entrepreneurship will take time, and a ton of it. To best ensure the success of the venture, key personnel must be able to commit to the venture full-time. They must clear their time of other things to create as much "free time" as possible. This free time is then "occupied" by the new venture. This takes on a number of strategic advantages. First, the key personnel will not be distracted by other things. This is very important to maximize productivity within the chronological parameters. Second, you will be able to commit the most actual production time within a set quantity of hours. In other words, you will get the most work out of the most time by your key personnel. This moves the venture along as quickly as possible, which is often critical to its success. We will talk more about this when we talk about "action" in the next article.
A talk about investing time energy would not be complete without a discussion of money. Time inevitably costs money. If key personnel are worried about how their mortgage is going to be paid, they can not maximize productivity. And they must be rewarded for their innovation. Reward can be delayed with stock options, and even some salaries can be deferred, but an understanding of compensation must be agreed upon early to ensure that time can be absolutely focused on success.
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