Dee Powers Finds Money!

I recently had the pleasure of reading a review copy of Dee Powers' and Brian Hill's 58 Ways To Find Money for Your Business. She wanted any questions I had forwarded with the review. I reprint them here:

Since most folks who are new to IM are going to be interested in JV and barter as sources of "leverage", how important is it for them to carefully consider all the other methods? I'm assuming here that they may have some background in business, but only see what's presented in places like the Warrior Forum, where you seldom hear about bank loans, Venture or Angel capital, etc.

Not considering all the options is like going into a gourmet ice cream store and refusing to taste any flavor but vanilla. A smart business person considers all the alternatives. Every option for money has a cost and some of those costs may be easier to handle than others.

For example an angel investor sounds like heaven (pun intended), a wealthy person who puts $50,000 to $1,000,000 in your business. Finally you get to increase your marketing, develop that new product, or buy the new equipment your business needs. The downside is you now have a partner. Someone who is involved in everything you do. If you are a very independent person who makes decisions on the spur of the moment, it’s going to be a challenge for you to have to involve that partner. And if you thought divorces could get messy, wait until you try to break up a company.

A bank loan might be a better choice. But loans have covenants that may limit you as well. You might have to pay any excess income over a specified amount to the bank to repay the loan. And it’s difficult these days to get a bank loan without personally guaranteeing it. Meaning all your personal assets – including your home – are on the line if your company can’t pay the loan back.

Venture capital gets a lot of media coverage but it’s not suitable for the vast majority of businesses. About 80% of venture capital money is invested in established companies, not start-up or early stage as most people think. The average investment is close to $8,000,000 per investment.

Also, the business plan section seems very complete and easy to use...I wonder if many will actually use it?  I mention this because I'm participating in a business planning/mentoring program.

A business plan is an excellent management tool. Putting together a business plan helps clarify the goals and objectives of an entrepreneur. A lot of us may not have a written plan but do have an action plan. The challenge is that our memories are not as accurate as they could be. We follow our action plan but don’t keep track of the details. If we hit a winning streak of sales we’re not sure what we did that caused it, so we can’t go back and replicate it. A business plan helps you see what went right, and why, and what went wrong.

It can also act as a motivator. If my goal is to get four articles published in major national print magazines, my business plan shows me I have to submit at least 40 query letters to probably 15 different publications over a two month period. It’s right there in black and white nagging me.

My business plan will also show me where I might have to start thinking about finding money. If I want to start an adword campaign, at the same time I’m outsourcing a new ebook, and developing a membership site, I’m not going to have the funds to do all of that myself. So I can forecast that in three months I need to raise, say $10,000.

One of the most critical mistakes business people make is not allowing enough time to raise capital. That reminds me of a client of ours, well actually we never accepted him as a client, but that’s another story. We were called by an attorney we knew, on Monday and asked to meet with a high tech entrepreneur on Wednesday. We arrived, found the office and tried to open the glass door. No going. You had to be buzzed into the reception area by the front office person. You couldn’t just open the door and walk in. After about five minutes the receptionist said Mr. Techie will see you now, punched in a code on the lock to the door to the main work area and led us to his office. Oddly there were drapes over the tables covering some sort of equipment.

Mr. Techie explained what a cutting edge innovative product his company was developing but never quite actually defined what it was. And then said he needed $2 million dollars. We asked him if he had a business plan and he said there was no need for it. We asked what the time frame was for raising the capital. He said he needed it immediately. We asked: well is immediately within 30 days, 8 weeks, or a couple of months, and what did he need it for? He responded we didn’t need to know how the proceeds were to be spent and immediately, meant immediately …as on that Friday.

Yikes! And you can quote me on that!

You can get more information from Dee and Brian at these links:
58 Ways To Find Money for Your Business
Business Plan Basics
Over Time

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