Is a Merger the Way to Grow Your Business?

How to Land a Business Angel

A ‘business angel’ is a private investor who provides capital for a start-up or growing business in exchange for equity in the company. Business angels are the second most common source of capital for small businesses and represent the largest pool of capital worldwide.  The range of investment angels generally make is from $20,000 to $1 million, although higher amounts are sometimes available. Angels usually develop a personal relationship with the owner of the business they finance, and want some sort of ongoing involvement with the organization.

Angels tend to be more intrusive than venture capitalists. It’s important that you and your angel share the same objectives for the enterprise as well as a similar timeframe for these objectives to be realized. You need to check out the angel in much the same way that they’ll perform due diligence on you, to ensure that you will be compatible for the term of your relationship. The ideal angel will bring more than just money to the table. They can introduce valuable contacts, provide strategic assistance, or serve as contributing board members.

1. Personally finance your enterprise as long as possible, until there’s a positive case for obtaining external finance to develop and/or grow the business.

2. Be certain you can work with a business angel before beginning the search for one.

3. Have realistic expectations of the money you’ll need and the amount of equity you are willing to give an angel in exchange for it.

4. Be selective in the kind of business angel you approach; look for one with particular skills or abilities that will benefit your business.

Business angels are looking for capital growth and sound indications that your business will be able to provide them with a good return on their investment. Prepare a business plan with the most up-to-date information, realistic financial projections, and sustainable valuations. Support it with as much research as you can gather. The business plan is evidence of the competence and knowledge of the entrepreneur who prepares it.

Locate business angel investors by approaching the established networks in your area, by indicating your interest to your accountant and legal adviser, and by searching on the Internet. You should also check the financial pages of the newspapers where they often advertise. It’s not just about money. Look for an angel with business skills that can complement yours and who will be able to share your vision for the organization.

Whether you’re training a member of your clerical staff in the operation of a new computer program or a factory worker in the use of safety equipment, there are several principles that will help you obtain the maximum return on your training investment. If the training you pay for doesn’t make a positive contribution to your business, it’s usually because these principles aren’t being followed.

Training has a cost, and it should also have a value to the business. It should have a measurable result that translates into a quantifiable outcome. Some typical examples of training outcomes are: more efficient use of equipment, reduced risk of accidents, better management practices and enhanced productivity.

What savings will result from the equipment’s being used more efficiently? This should mean time savings and/or more productive use of staff time, both of which can be measured in financial terms. If the potential savings can’t be quantified the training could represent a poor investment of the organization’s funds.

It’s insufficient to simply send someone off to a training course and expect them to come back with magically improved performance. All training should be conducted in a three-step process that prepares the person for the training, trains them, and then supports the implementation of what’s been learned.

1. Preparation - The person being trained needs a complete understanding of the purposes of their training and what it’s expected to achieve. They should be given a clear picture of what they’re being trained for and how the training will be conducted. They should also be told the cost of the training to give them an appreciation of the investment the business is making in their development.

2. Training - It’s your responsibility to see that the content of the course fully meets the needs of the business it is meant to address. If, for example, the business plans to upgrade its credit management software, personnel will have to be trained in the use of the new program. The selected course must be specifically tailored for this software and also must be compatible with the equipment in your office on which it’s going to be installed.

3. Implementation support - When the person returns from their training, review with them what they’ve learned. Be sure they have all the support needed to implement their new knowledge and that they can apply their newly acquired knowledge as soon as they return to their workplace. This can mean some form of IT support, assistance from other members of the team, or additional resources such as manuals or equipment. Follow-up to ensure the learning is correctly applied and that the anticipated value is received by the business.

It’s important that you have an agreement with the employee that the training they undergo will be used to benefit the business as much as possible. Some possible elements of this agreement that can be summarized in your company’s policy and procedures manual are:

• That what they have learned from their training will be applied to help them better perform their job responsibilities

• That what has been learned from the training will be shared with other members of the team if it will help them perform in their roles

• That you will support them in their implementation of what they have learned in the training

• That they are encouraged to request any additional materials or equipment needed to ensure the successful application of what they have learned

In general, services are more complex to price, to deliver and to evaluate than products. Defining the quality of service delivery is very difficult but it boils down to whether the customer feels well-served or not.  So the key thing for a business that provides a service to do, is to build strong personal relationships. To do that you need to keep three things in mind.

1. Know what customers want - Giving customers what they want is the basis of your personal relationship as well as the most critical factor to address in your marketing. What value do they want to receive from you? What problems do they want you to solve for them? What are the benefits they want to enjoy after spending their money with you?  Customers often expect your service to be delivered in a specific way or by a specific person. These considerations must also be taken into account when you’re trying to determine exactly what your customers want.

2. Give it to them - Are you meeting all their needs or just some of them? Are you delivering your service the way the customers want? Compare what you give your customers with what they really want and you’ll identify areas that need attention and see where you need to make changes to your offering to make it more attractive to prospects and build stronger customer relationships.

3. Know what your competition is doing - Make a point of monitoring the businesses that compete with you. Ask these same questions about them and compare the answers with what you’re now doing. It’s a good way to discover areas of opportunity for your company and to identify new services that can be added to your offering to build your revenues.

Someone buying a service from you won’t know how good it is until after they’ve actually bought it. To successfully sell your services you need to convince prospects that they’ll receive the value and benefits they are after, and the best way to do this is to use the experiences of your existing customers.  Testimonials are the most powerful means of overcoming any doubt in prospects’ minds about using you to provide the service they need.

Ask your existing customers to speak about their experiences with your business and how you’ve helped them. Concentrate on the points that are key issues for most or all of your customers. Use these testimonials in your marketing; even hang them on the wall in your reception area. When a customer comes to you for a particular service it is generally because they don’t have the expertise or ability to do it themselves. If they can see testimonials as to the quality of work you’ve done for others they’ll be a lot more confident that they too will have a positive relationship with your business.

“In business, one of the challenges is making sure that your product is the easiest to experience.”  - Mark Cuban

Be sure to read each article with the mindset "How could this apply to our business." Take notes as you read and commit to having the ideas implemented by the time the next edition arrives. Also, make copies for team members. To really make sure something positive happens, work with your business development specialist to talk your team through the ideas and how to set a schedule for getting them implemented. Cornerstone Business Solutions is here to help you get started.

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

All rights to the content in this publication are reserved by RAN ONE Inc. Any use of the content outside of this format must acknowledge RAN ONE Inc. as the original source.