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| Venture Borrowing Techniques |
| Taking Your Compnay to the "Next Level" |
| Don't Sell Solutions. Sell Problems! |
We don't address debt financing very often at the Forum because so many early stage entrepreneurs think only in terms of equity financing and don't realize there are people out there who can become involved in other ways and still provide you with the capital you need. That's what venture borrowing is all about.
Do you need a new server or other equipment in order to host that web site?
Is working capital running a little thin?
Do you have an aversion to giving up a lot of equity in your company but still have a great opportunity - if you could just secure some additional capital?
Perhaps venture borrowing or venture leasing is for you. Sometimes there are advantages of debt financing - like holding on to your equity and giving up warrants instead of shares. That way your backers share in your success instead of hindering it, and they seldom want to be on your board.
First and foremost, make a business plan for the New Year. Think about what you have to accomplish in order to increase revenues, consider the implications of executing that strategy for every aspect of your company and plan accordingly.
Invest in your most important asset - yourself. If you need some extra skills to manage more effectively, get some training. There are many business seminars and short term training opportunities that are offered for business owners, ranging from accounting to managing tax issues. Entrepreneur University provides training covering most of the basic skills in starting, managing and financing a new company. Find other opportunities in the newspaper, online, at your local county college, and by word of mouth. Remember that your employees might become much more productive with some additional training, too.
Do a serious sales projection, and think about how many new customers you could win over by making personal sales calls (a personal telephone call to the CEO is a good second choice). Next, make a schedule to contact those prospects a few at a time over the course of the next month - then do it!
No one is indispensable. Train your closest subordinate to handle the day-to-day managerial tasks in the office so you can get out more and meet your prospects - and stay close to your customer. If you get sick this winter it will be a decided advantage if someone else knows how to complete those tasks while you're eating chicken soup.
Invest in some new equipment and save yourself some time. If your computer is more than three years old, youÕre probably spending too much time waiting for programs to load or getting on the Internet. Just adding another 32 Megabytes of memory could make you think it's a new machine, so could a cable modem or DSL line? Perhaps your staff might be more productive too, if they didn't constantly have to nurse ancient equipment.
What about some additional financing? Money seldom solves all problems, but in almost twenty years of business consulting I have seldom seen a company that couldn't benefit from an injection of working capital. If you need some extra cash to buy that new equipment, or expand your marketing program, consider taking a short-term loan to cover all or part of the expense. Interest rates are presently low, and you'll be investing in your own success.
Get professional help. Thinking that you can save money if you do it all yourself frequently costs you more as you struggle to ascend the learning curve. Why not hire someone who has the skill set you need rather than depending on your brother-in-law or one of the kids? Accountants, attorneys, and consulting professionals should all be considered part of your management team. Use them more effectively by assigning them the tasks you can't do yourself. Sure, it costs you, but not getting the work done can cost you more in terms of lost business and dissatisfied clients.
If you're just starting out, consider moving into a business incubator as a launching pad or development location for your business. Incubators can save you a lot of time and rent by providing shared services so you don't have to buy a copier or fax machine, or rent a conference room. Most important, incubators provide the advice and counsel of an experienced manager who can act as your advisor. Tenant companies in business incubators have a survival rate exceeding 80% - a significant contrast to that of most new companies. (The State of New Jersey supports incubators at Rutgers University, Stevens Tech, NJIT, Burlington County College and other locations as well.)
Look into establishing a company website. The Internet is clearly not just a craze, and the ability of a new company to be more credible and look like a larger company is obvious. There are plenty of website developers in New Jersey and you can have a website created for your company for as little as a few hundred dollars. There are in excess of 50,000,000 users on the Internet today. How many are potential customers and clients for your company? Can you afford not to participate?
In the end it's all about execution. If you have the time, talent and dedication you'll eventually be successful, but clients demand that you provide what you say you can provide, or service the products you sell them. Now start your plan!
It's easy to assume that a big company will purchase the better solution that you have created. However, a big company buys nothing – your better solution will be purchased only by the authorized decision-maker within the company that has the appropriate problem. The decision-maker that you need to deal with has the responsibility for addressing a collection of problems. He has too little time to learn all about each of the problems over which he has authority. This individual will rarely purchase a solution from the aggressive salesman acting as the zealous advocate of a specific solution. Instead, solution-pushing salespeople are viewed as biased noisemakers.
The more appealing resource for your target decision-maker is that person who appears to be an expert on the problem that needs to be addressed. The problem expert (opinion leader) is more articulate about the requirements of a solution than anyone in the customer organization. He provides helpful specific advice to the owner of the problem. Once he has earned the trust of the decision-maker, the responsibility to solve the problem will be his (he will get the order).
Each new technology-driven venture needs to effect exactly this kind of positioning in the course of constructing a lucrative business opportunity around its invention. Position your company as the master of a problem.