Mini-Course in raising MONEY for your projects...
I know many of you are trying to raise money for your projects. Some projects just need a few thousand to get them launched, and others need serious money over a long haul.
This may help anyone who is in the money search process. It may NOT help either.
First, do you need a formal business plan?
I say yes.
But, the real world answer is no. I raised $12,000.00 for a golf project over lunch, with the "plan" written on the back of a paper napkin.
These kind of things happen most often not because of the IDEA, but because of who is listening to it.
On the other hand I had to churn out a complete 90 page plan, with Pro Forma, market analysis, cash flow projections, COMPREHENSIVE plan, and the only part of it that got read was the first 2 pages.
The VC (Venture Capitalist) wanted to know:
The Idea. The Person behind it. Period.
Anyone who has ever written a formal Biz Plan knows it is work, I mean, brain straining thinking. And I don't know of anyone who enjoys it (except for those who get PAID to do it).
That is why MOST people never do it. Guess what? Most people don't get funded either. Coincidence? I think not.
A plan makes YOU focus. It makes you THINK. So I'm big on making plans, even though I've never really found them necessary to raise money.
Listen, you could go to your local library (remember those things?) and you will find many books on writing a business plan. Take advantage.
So, with that in mind, here is a mini-course in raising money. By NO means comprehensive, just a few hints and ideas that have worked for me and for other people I know.
Some of this information was originally published in the SCI NPGS UPDATE HOTLINE Issue 6911, in an article I wrote called:
"HOW TO FIND YOUR MONEY ANGEL IN 30 DAYS".
In this article written for Ben Suarez I detailed a four step process:
STEP ONE: Know what you want and why.
STEP TWO: What are you going to offer to your Angel?
STEP THREE: Finding your angel.
STEP FOUR: Contacting and COMMUNICATING with potential angels.
Let me give you MY definitions, so we can be on the same page as I discuss this.
An "Angel" is an Individual (or Entity) with the MEANS (money) and WILLINGNESS to invest in other people's projects.
A VC (Venture Capitalist) is an Entity who will also invest in projects, but in return, they position themselves as having CONTROL.
Now, there are always exceptions, but these will work for this discussion.
Let me tell you the MOST important thing in raising money.
It is your attitude.
You begin a search for a person that wants to get in on a good thing, and in truth you are doing them a favor by letting them have the opportunity.
That is the attitude you should have in your MIND, but not one you want to express. I've seen this presented as arrogance, in the form of a "once in a life-time opportunity" or a "ground floor opportunity" and watch as the arrogant person leaves WITHOUT the money.
Tell me that, I'm gone.
One of my mentors once told me a once in a life-time opportunity comes around at least every 24 hours, check your mail box. Right?
So, put that IDEA out of your mind and very far away from your lips...
BUT, your project must begin with belief.
If you don't have confidence and belief in your project or in your ability to do it, then that comes across during your presentations.
So the first thing you MUST have is a very clear idea of what you need, how much money, what it is to be used for, in detail.
SEE, the Angel can tell from your preparation in answering these questions how well thought out this idea is.
Most of the plans I've heard, observed or evaluated were NOT very well thought out.
This also includes ideas for projects. Part of my job at SCI as a Creative Marketing Professional was to evaluate submissions made to the company for potential products.
I reviewed several hundred projects, many were DONE, finished, ready to go to the market.
Except we wern't going to be the company that took them out. The number one reason?
The MARKET didn't want them.
One nice thing about being inside a huge direct marketing company was getting to see how they TESTED, the foundation of success in marketing.
But the "Entrepreneur" or inventor or author didn't BELIVE it when I would call them up and say,
"We don't think there is a market for us to present your work to."
I called, on average, 5 people a day, and told them their idea was rejected. I told them why we felt that way based upon our research.
You want to know the response?
"Thank you Mr. Alexander and thank Mr. Suarez for taking the time and spending HIS money to evaluate my project. I appreciate what you have told me and I'll take it in consideration and try to build a better mousetrap."
HAH! Not once did I hear anything like that.
Most were MAD, angry, upset that we didn't see the potential, that we didn't "get it", that we were so narrow minded in our thinking.
Day after day after day until it got to the point where I dreaded making the calls. But I learned a lot by doing it.
It reinforced what Ben Suarez teaches, a lesson HE (and I and probably every marketer out there) learned early on...
NOT TO FALL IN LOVE WITH YOUR IDEA...
We all do it. We all are guilty. But if you want to raise money, or have your projects taken to the market place and be a winner, you've got to live in reality.
The MARKET dictates whether your idea is any good or not.
The people who have to part with their money will determine the WORTH of your creative baby.
And if they don't spend their money, if you don't get results, the market place is telling you something about your project...
THEY DON'T LOVE IT ANYWHERE NEAR AS MUCH AS YOU DO...
Same goes with raising money. If you keep getting REJECTED, and that is another way of saying TEST, and you don't make adjustments in your presentation, it could take a very long time to get what you want.
It happens. You will read about persistance. About a person with a great idea that gets rejected over and over and then makes it.
But that is as rare as hen's teeth.
Let's focus on YOU...
If you are getting REJECTED, then the thing you want to do is to find out why...what are the objections? What is wrong with your idea, IN THEIR MINDS...
So the next time you make a presentation, you can make an adjustment.
I practically YELL for people to take some sort of a sales job along their path, so they can learn some of life's greatest lessons. Most won't do it.
But the PROFESSIONAL salesman may have a "pitch", they know when and how to vary it to the person they are talking to.
They also know what elements work, and use those over and over...and they constantly TEST, TEST, TEST until they have a well polished "pitch" that they ADJUST...
So, if you have made the same pitch for money to 30 people and they all tell you they don't like your management concept, and you keep pitching that concept, what do you think is going to happen?
The answer will be found in your wallet.
Here is a FIVE STEP process for Preparing your Pitch. It is based upon the NPGS formula as Ben Suarez teaches, and I've added one of my own.
PEOPLE (My addition)
Those of you doing direct marketing or REMOTE direct marketing as it really is, recognize these four P's.
But let's put them into the context of a proposal for raising money...
Your Angel will want to know...
Prospect...what is the market you are targeting? What do you know about them? Who and where are they?
Product...how does your idea impact the prospect? How does it make their life any different? What will this do for the prospect?
Promotion...how are you going to get to this prospect. What forms of presentation will you use? What has worked in the past? What evidence can you show that you know and understand this market?
Presentation (or Media)...how will you take your promotion to these people? How much will it cost? What media vehicle will you use to reach your prospect?
PEOPLE...who is your management team? What experience do they bring? What expertise? What investment have they (YOU) made in the project so far.
I have read 4 proposals in the last week, all unsolicited, and all proposals that I just didn't see happening, because of the way they were presented.
It is NOT easy to THINK through the whole process and articulate it. But if you use the 5 P's above, and use a 3 sentence paragraph to describe each of the P's...you have the beginning of a blueprint, a plan that can help you get what you want, if you know what that is.
Once you know that and can clearly ARTICULATE it in the most brief way that you can...you have a chance of at least catching the right person's attention.
Then you can go to those four steps above, and begin your search.
Let me finish this by saying that the second biggest mistake (after falling in love with your own idea) is;
looking for investors you FOCUS on ROI (Return On Investment)...and you erroneously think that is what motivates ALL investors...
Investors understand Risk/Reward, you don't have to waste their time explaining the POTENTIAL of your project...
Some want equity, just in case you do hit a home run..
They want to make sure they get their money back...the fear of losing their money is greater than the idea of making it grow...
Second to that, angels have a tendency to invest in things they understand and participate in.
My golf shops were invested in by GOLFERS. But I wasted a lot of time asking Non-golfers, people with MONEY, but NO interest in the game...
Not even high risk ROI could entice them...and you will find this to be a general pattern...
The people you want to invest in your project are going to be the users, suppliers, or people within the industry or market area...
Your dentist, loaded as he/she may be, may not be interested in your Internet idea if they hate computers...get it?
Take a few minutes and write down the above ideas...Use the POA as posted below...
Make your goal a dollar amount. Set a time limit for it's acquistion. Go to belief. Then go to center your thinking upon it's manifestation, then go to PLAN...
and you have a chance at raising money...use the tools that I'm providing here and with the SQUARE ONE WORKSHOPS to set and achieve your goals...
I hope this has helped one or two people, but experience tells me there are more than one of you out there saying,
Yea Gordon, but MY IDEA is so good that...
OK then, good luck.