July 24, 2007

Raising Capital: What If You Don't Know Any Investors?

A couple of years ago I was approached by an entrepreneur who had no potential investors in her pipeline. This person had moved to California from out of state, and she didn't know anyone. She asked for my assistance in capitalizing her business. I reviewed the business plan, and it was fascinating. The plan set forth an interesting approach to solving a difficult problem. My suggestion was that rather than finding investors who didn't know her – and whom she didn't know – she should consider a different approach.

So we tidied up the business plan, we added some spice, and we enhanced the strategy. We also removed some of the deficiencies. For example, one of the elements of the plan involved providing her spouse with employment because he hadn’t been able to find a job. While that may be a noble cause, potential investors aren’t interested in subsidizing someone’s spouse. I counseled her to remove this element from the plan and deal with the spouse’s employment issue after some funds had been raised.

Incidentally, when I say that we spiced up the strategy, one of the things we did was enhance the plan’s goals so that the payoff for the investors would be much greater when the plan began to take hold.

After we completed the plan, I suggested that rather than approaching the investment community in which she had no contacts, she should enter her plan into a business plan contest that was being offered by a local university. The thoroughness and creativity that we had applied to the plan (along with a brilliant concept) paid off, and she was awarded $25,000 through the university-sponsored program.

So as you're trying to grow your business every day, be creative. Think outside the box. There are many ways to raise money, just as there are many ways to skin a cat.

About Joel G. Block

Often dubbed a "Growth Architect" by his clients, Joel Block advises companies on explosive growth strategies by driving revenue and sales. Well known in the capital markets, Joel is a successful entrepreneur, speaker and advisor. Would you like to get a private phone consultation with Joel? Visit www.joelblock.com/capital for details.

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