5 Ways Entrepreneurs Send Investors Running
Creative entrepreneurs can be fun to work with, and they present unique challenges as your imagination runs wild. The possibilities they envision for their dream are endless and they can struggle with focus and reality. Learning how to channel creative energy and limitless dreams into a plan of action that will result in a certain measure of business success can be a great challenge for many. Nowhere is this conflict and contrast between a dream and reality more prominent than when the entrepreneur presents his story to potential investors.
If you are one of the creative entrepreneurs, your reality check begins with understanding that investors are trying to assess the opportunity by assessing the risks involved and the value created thus far. This can be a difficult process for the entrepreneur who is so obsessed with the creative aspects of invention and the wild dream in his head. Various statements that entrepreneurs make to seasoned investors are sure to get them running and fast. They may like the product, but perceive that you are the biggest risk impeding its potential. In that case, they can make an offer to buy the product, put the entrepreneur out of business, and insert their own management team.
Five Frequently Made Statements by Entrepreneurs That Make Investors Run:
1. No one has done this before. No one may have done exactly what you created the way you have implemented it, but this statement reflects either complete ignorance of how people are solving the problem today or astonishing arrogance in somehow believing that you have magically emerged. out of the fog. of creativity and invented something so unique. First, you lose credibility with the investor because of your lack of knowledge, and second, you can convince them that there is no market for what you have created. Nothing good can come out of such a statement. You would do well to acknowledge the various ways others are solving the problem today and then clarify why their creation is a better solution.
2. This product will revolutionize the world of … This statement is similar to the first, but reflects ignorance about consumer loyalty and buying behavior, the marketplace, product adoption rates, distribution channels, and more. A million faster, better, cheaper, sweeter products have arrived and promise to revolutionize the world. Even large corporations are not immune to this problem. Being successful with your new invention does not mean revolutionizing anything without the slightest idea of how to achieve it. Instead, it requires a deep understanding of the issues involved in getting your product into the hands of willing customers and turning them into raving fans. Where you go from there is up to you, your product, and your new fans.
3. We don’t need marketing. Oh yeah, this is the tried and true: “This product will sell itself. Everyone will want one.” Similar to number two, this statement reflects a staggering ignorance about how you will get customers to know about the product, persuade them to buy it, and then turn them into raving fans. Too many entrepreneurs prepare financial projections practically devoid of marketing expenses, but showing astronomical growth since the day of the product launch. The chances of that being a successful strategy are less than slim.
4. Tens of millions of eyeballs will flock to my website. The lack of marketing in building strategic plans is most often manifested in web-based business concepts. Entrepreneurs naively assume that simply having a URL, launching a website, and then doing some search engine optimization and social media will have crowds coming to visit us. They will be happy to cite YouTube, Facebook and other large successful web-based entities as examples. For each of those sites, there are thousands of potentially valuable and creative websites floating in the vast ocean of the Internet. They strive for relevance, attention, awareness, and a regular loyal fan base. Don’t assume a “build it and they will come” attitude. You have to sell it and have them come and let them help you build it.
5. If only 1 percent of the US population bought one. Of course, if this were possible, it seems like a fantastic opportunity. The problem is that it reflects the same ignorance and naivety about the previous marketing. Simply assuming that a very small percentage of a very large market will buy your product because the small percentage seems “very conservative” reflects a complete lack of understanding of who will buy the product, why they will buy it, how it will be delivered to them. , how you will let them know, and so on. Instead, design a sales and marketing plan to clearly show how you will get your first customers, then your next, and so on until you grow to a large number. Who knows, this may turn out to be a small percentage of a large market, but you get there by selling to one customer at a time.
There are many more misunderstandings that can divert a potential investor from the dream. For example, answering the question “What will you do with the money we invest in your business?” with “I’m going to pay off my credit card debt of $ 98,000.” A dose of reality often makes more money in both investment funding and market success, as the entrepreneur takes a closer look at exactly what it will take to deliver the product, make customers aware of it, and convince them of that they buy it. All this while making a considerable profit; yes, that’s what it’s ultimately about, and investors are eager to understand how you will turn your small contribution into significant financial gains over time. Revolutionizing the world is rarely included, but good judgment about the customer, the product, the business model, and the marketing usually is.