I was recently invited to an event put on by Owen Clark of Byzhub. The speaker, Basil Peters, is an experienced Angel Investor who discussed opportunity for entrepreneurs seeking investors. For more than 5 years news outlets are predicting D-Day, the lack of financial support for Small Business owners, which would cripple the economic growth. As Peters says, it couldn’t be further from the truth; his years of experience, logic, and network of fellow investors proves more compelling than media conglomerates interested in selling stories.
The topic was entitled: Raising Money for your business? It’s easy if you know how!
Looking around the room of 150+ business owners I was not alone in my quest for knowledge on Venture Capital, Angel Investments, and the process to achieve the perfect win-win outcome. Finding capital for any startup is essential for your company to launch and grow. Experts predict that lack of cash closes half of all startups within 5 years. I would suggest it is overspending that kills your business. Find the critical aspects that keep your business afloat and pinch your pennies.
Investing is the least understood topic when talking “business.” Unless of course you live in Silicon Valley where million dollar investments are passed around like peanuts at the bar. For the rest of us it’s a mystery, and our first experience is often across the table negotiating terms of an investment. Here are 5 points that I left with from Basil Peters topic.
Investments are just as much about the business owner as the possibilities their business presents. Angel Investors seek owners who are charismatic, enthusiastic, and passionate. The business will get you in the door, your personality will sign the cheque.
For the investment to make cents for the investor (yes cents) your business should have 10x return potential. 80% of all returns will come from 10% of the investments. Without 10x return to cover the failed investments that are expected your investor will be less likely to risk their money. This may not seem fair, but consider your business. If you have a retail shop your markup on products include theft, or damaged products. Investors are simply playing the numbers.
Most large companies like Yahoo, or Google are constantly on the look out for 20 million dollar purchases. Their growth depends on it, and their shareholders demand it. Unlike small businesses, cash reserves are a liability that generate little interest.
Popular news headlines include 100+ million dollar deals weekly; this is exceptionally rare. The majority of purchases are under 15 million dollars with the odd exemption being sold for more then 100 million.
The last point describes the truth about available capital for entrepreneurs seeking investment. 20 years ago it would cost millions of dollars to launch your business. Without the internet you would have to create custom software, produce ad campaigns and spend millions on marketing.
Todays entrepreneurs can bootstrap companies for as little as 10,000. The news outlets are accurate when describing the decrease in available capital yet forget to point out the reduced cost for startups. Angel Investors, and Venture Capitalists are constantly looking for new opportunities.
Leap of the Week:
Find an angel investor in your community and be clear about your opportunity. The best advice Peters gave: Utilize all personal financial avenues prior to finding professional investors.
Leave a comment! Asking questions as well as sharing wins, challenges and experiences is not only necessary to growth, it’s also a great way to learn from your success community! (not to mention an excellent way to drive more traffic to your site!)
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Having a Facebook Page will not bring instant sales.
Twitter will not triple your Web traffic overnight.
A press release will not get journalists banging down your door.
Harsh truths, I know, but ones you need to hear. The problem with small businesses and marketing is they want instant pudding. They want to see a spike in sales or Web traffic instantly, and that simply doesn’t happen unless you’re Old Spice. Freshly showered men aside, all your marketing efforts should lead to one thing: trust.
Why Trust Is Important
Is trust necessary? Not really. You could sell a thousand widgets to a thousand people and never see them again. Or you could work to build trust with these customers, and rely on them to become your brand evangelists, to let them tell others how great you are because you’re a trustworthy company. Let them blog, tweet and share their love on Facebook.
Trust keeps customers coming back. If what you sell costs a lot of money, it gives them the confidence to drop the $100, $1,000 or $10,000 on your product.
How to Build Trust
Every component of marketing is about trust-building, if done properly.
Social Media. Face it: You probably haven’t bought much from brands on Twitter just because they’re there. If a brand you’re following is having a promotion, you might click the link and buy. But that’s promotion. Not marketing. So your role in social media is to use it as a channel to build trust. Create conversations, whether they’re related to your industry or not. Share relevant links, even if they’re not from your own blog. Interact. Give people a reason to seek your brand out on Facebook or Twitter. A great example of a brand that does this is Mabel’s Labels. Under @mabelhood, the brand shares bloggers’ links and rallies behind its supportive followers. They’ve created a community that translates into trust, and then into sales.
Press Releases. Sometimes trust is just about being there consistently. Putting out a press release each month can go a long way to say, “Hey! We’re still here doing awesome things.” And while journalists may not be clamoring to publish your news, searching for keywords that lead them to one press release after another from your brand certainly shows that you’re consistent. And consistency is one of the cornerstones of a healthy relationship, is it not?
Blogger Relations. If you’re smart enough to be working with bloggers to spread the word about your products, kudos. But how you work with them can have just as much impact on your brand as what they think of the product. First off, pay your bloggers. Their time is as valuable as yours. But be there for them too. Make sure they know you’re partners in the blogger outreach campaign you’re working on, and make sure to address any questions or concerns they have before they post. If you build that trust, they’ll go beyond the call of duty for the campaign and talk about your brand on all the social channels, resulting in bonus play for you.
Leap of the Week: Where to Go From Here
If I’ve put you into a tailspin, don’t worry. Keep doing what you’re doing in marketing, but shift your thinking. Don’t focus on how many (or few) website visitors that last Facebook contest netted. Instead look at how you built the trust of hundreds of loyal fans. If they are engaged in what you’re doing, you’re successfully building that trust. Keep it up, and those relationships will come to fruition.
Got something to say?
Leave a comment! Asking questions as well as sharing wins, challenges and experiences is not only necessary to growth, it’s also a great way to learn from your success community! (not to mention an excellent way to drive more traffic to your site!)
To learn more about how LeapZone Strategies can help you increase brand awareness and overall performance and profitability through business, branding and marketing strategies, fill out our free Needs Assessment Questionnaire today.
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Leave a comment! Asking questions as well as sharing wins, challenges and experiences is not only necessary to growth, it’s also a great way to learn from your success community! (not to mention an excellent way to drive more traffic to your site!)
To learn more about how LeapZone Strategies can help you increase brand awareness and overall performance and profitability through business, branding and marketing strategies, fill out our free Needs Assessment Questionnaire today.
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