Happy ever after? How to live with your new investor.
In this final part of Doug’s advice for businesses seeking investment Doug explains the important things to remember once you have a deal signed.
“Working with your financial partners . . .
One of the things a management team must consider as it vets prospective funders is how easy they will be to work with when the business hits a rough patch. As a business owner or business management team vets a potential investors they should consider how comfortable they would feel calling them with bad news. The cost of working with an easily rattled or inexperienced Angel or VC may be far too high for a good business to tolerate.
Once the deal is made, financial partners in a business have a right to expect straight forward, timely and honest communication about the business. They are, in reality, part of the business and they have every incentive to help a business they own a share of weather any financial storms. Letting them know that a problem is on the horizon is important. Listening to their insights and using the resources they can bring to bear to help out is critical. A business owner may be captain of the ship and financial decisions may rest in his hands but only a fool ignores help and advice from his crew.
The smartest thing you can do for your business . . .
Successful serial entrepreneurs think about business in way that most new entrepreneurs do not. This is because over time, one learns what businesses really need and perhaps more importantly, what they don’t. If you are a new business owner, look for guidance, advice and support from other entrepreneurs and business owners. Take courses from them, work with them as consultants, read books on business written by them.
The advice you get from family, friends, accountants, lawyers and the government comes from people who have most likely, never done what you are trying to do. As well intentioned as they are and as informed as they may be about their areas of expertise, there will be critical gaps in the guidance they give you. This is like taking advice on how to climb to the top of Mount Everest from people who have only seen it on a map.
You have my best wishes . . .
If you are an entrepreneur just starting a new enterprise, or a business owner with an enterprise already underway, I wish you the very best on your journey forward. If you need help starting a profitable business, or help making your business more stronger and more successful, I hope you will reach out to School for Startups. We look forward to playing a role in your success.”
Our thanks to Doug for this useful series of articles. We invite your comments on this final section. (Read Part 1 and Part 2)
[...] have a third and final instalment of this article coming on how to work with your new financial partners . . . We’ll try to squeeze it in between Christmas and the New Year. In the mean time we [...]