12 Mistakes Often Made
Perhaps, one should put themselves under the microscope when then are seeking capital for here are 12 mistakes often made in the “Quest for Capital!” First and foremost, always remember that “Cash is King” – always for without it, failure might be the only option. As one of my business teachers once taught me the definition of a business: the 3 C’s – Cash, Cash and Cash for one needs it to start a business, manage a business and then one often forgets that in the final analysis you must turn your investment into Reality – make money and then exit if that is your objective or provide for its continuity if one wants to continue building his EQUITY! Without cash, the costs for success might be one’s most expensive lesson!
Second, and equally important, is the fact that one’s success in seeking Cash might be oneself – your EGO, Appearance, Commitment and Presentation! Do not come to a meeting improperly dressed and wearing your Ego on your sleeve. Listen and learn well as to why you are being denied “the Opportunity!” Further, your presentation might also be too long in content, not focused and rambling in content or just missed the Boat! Here, most people forget to crystalize what the Opportunity is – the how’s of what differentiates your from competition. Too often presenters do not have at the beginning of their presentations the Twelve Reasons, yes – 12, for that makes one think harder and not just state the typical explanations as to why one should invest.
Now, here’s comes the Challenge: Number 3 – “I versus We.” We shows a Team Approach – I shows vulnerability and dependence on one person. I also tells of one’s ability to share in the Rewards. Remember the Bill Gates/ Microsoft Story – he probably made more millionaires in seeking Success than anyone else in U.S. Corporate History and that is more than likely the reason for becoming the “world’s wealthiest man.”
Next – Number Four, the Approach. Make sure your business model makes sense yet also defines one’s capital needs with the proper supporting documentation. Yes, that means the ability to put forth and independently analysis assumptions used to create one’s Business Plan. Then, comes Number 5: the Risks Factors which lawyers always state in any Offering of Capital and sometimes include the “kitchen sink.” Here one should think “outside of the Box!” A Presenter should look at his opportunity from the other side of the table and put under the microscope as if he were investing his last penny. Number Six is where most investors request “too little capital” in order to avoid ownership dilution which oftimes is a necessary part of one’s costs. Probably, Howard Hughes had the best insight here: tell me what you need and I will multiple it by 1.5 in order to accommodate customer miscalculations (“anticipation revenues”), production problems and the ability that cash provides which is the longevity of a business.
Numbers Seven, Eight and Nine are inter-related. These include: anticipated investor returns, market investment capitalization analysis – who is in the industry and what is the range of success for results, and what are reasonable investment returns. Too often presenters oversell their opportunity here and present themselves as if the “sky has no limit!” Just remember, Number Ten, it is how an Opportunity is managed that creates the Return! Number Eleven then follows: keep your investment presentation: Simple and Stupid, the KISS Philosophy, so your audience can understand it and doesn’t have to be an Einstein to understand it.
Lastly, Number 12, if “I” invest “X”, how much do I need to invest, what is the range for my Capital Return and how soon can I get my money back – the when and Greed Factor” for everyone likes to tell how smart they were, taking home the “Bakery of Monetary Rewards.”
These are just some of the lessons that I have learn as a senior expert in the Capital Markets and becoming one of North America’s leaders in the corporate middle market in “how to be successful in seeking capital from a results oriented approach.”
Take a look at M Line Holdings, Inc., (Symbol: MLHC), an “under valued” opportunity coming through a “definable” operational turnaround , where Bruce Barren is the Chief Executive Officer, to see how the Rules of Capital have been positively implemented! Mr. Barren is also Chairman of The EMCO/ Hanover Group (www.emcohanover.com).