So you are resolved to become an entrepreneur? You have come up with a good idea and managed to save a little money and borrow from friends and family. You have your first customers and even sending out your first invoices. Things are moving, albeit slowly.
You were the first to bring this idea to market and although this is an advantage, you must keep in mind that you may face new competition any time. You need to move fast and grow faster.
The trouble is neither your customer portfolio nor your human resources can yet allow for such rapid growth, and you lack the financial ability either. You believe that your business has potential and you think angel investors may take interest in your project. You prepare some best and worst case scenarios along with your projections and a 3-year business plan. You are now ready to have your meet with angel investors.
Individuals who decide to become entrepreneurs generally go through these stages and more. I have also met people who shiver at the thought of even meeting an angel investor. The reasons for this may vary but in my opinion the most common one is a lack of confidence.
Ask yourself the questions that matter
Coming from a culture that sadly does not welcome criticism, I am sure that entrepreneurs are mentally struggling with endless questions such as “What if they do not like my idea?”, “What if no one is interested in my business?” or “What if my presentation is not good enough?”. Whilst their minds are busy with these questions entrepreneurs sometimes neglect some other equally important questions and fail to take timely measures. Some critically important examples are as follows:
Can others try to steal my idea?
Do the angel investors I am going to see have any experience specific to my industry?
Can I get feedback on the previous investments made by the angel investors?
My experience tells me that if the entrepreneur who set up the business is not good at presenting their business, it is far better and more persuasive to let an eloquent partner to present it. Looking at it from the perspective of the angel investor, the investing party is looking for some reference points since they are taking a risk by participating in a business they know very little of. Another very important reference point is patent application… In my opinion it is also important that the project or initiative acquires funding from crowdfunding sites such as Kickstarter. One thing to remember: even if such funding cannot be acquired, having applied to these sites will contribute greatly to brand perception.
Favour sustainable entrepreneurship
Just like angel investors, entrepreneurs too are taking certain risks by allowing investors to participate in their enterprise – regardless of the percentage of their shares. Since this is the case it will be more beneficial to the protection of your rights in the articles of association if you hire an experienced lawyer who works with entrepreneurs rather than finding a cheap lawyer through friends and family.
It is very likely that a financial and/or tax audit will be carried out on your business before any investment is made. Sound accounting records and good documentation as well as accessible and intelligible data contribute greatly both to presenting a corporate image and to the value of the business.
My final words on the matter will be about sustainability. The world is facing many problems including global warming, starvation, poverty, human rights issues and corruption, and we must keep these in mind and ask the following questions when we start a new business: Which problem am I helping to solve with this business? What is the scope of such solution – my interests only or is there more to it? What social or environmental impact will my business have? Is it a negative one that will consume future generations’ resources or is it a positive one that will add to those resources?
For a more detailed version of this article please visit Dr. Levi’s blog here.