If you surveyed entrepreneurs who have failed, and asked them why they believed they failed, I guarantee the vast majority of them are going to say it was because they lacked proper funding. What these entrepreneurs fail to understand is that the inability to get funding is merely a symptom of a bigger issue. If you want to understand the true cause of why these entrepreneurs lacked proper funding, look at a business through the eyes of an investor.
Let’s assume you have an extra ten million dollars burning a hole in your pocket. You’ve made your money building your own entrepreneurial venture, so you understand the process. Instead of repeating the process again with a new idea, you decide you’re going to invest in other entrepreneur’s dreams. So, you announce to the world that you have money to invest, and you begin to get inundated with business plans. As you read through these plans, what’s the one thing you’re going to look for, in order to determine whether or not you’ll invest in an entrepreneur?
If you read enough business plans, you realize that good ideas are a dime a dozen (so this won’t be what moves your needle). What about those pristine financials that project billions in revenue in the next five years? If you want to have a sobering experience, ask the average entrepreneur to walk you through the assumptions they made to build their financials (and force them to explain their assumptions clearly enough for a five-year old child to understand). I guarantee financial projections will not be what makes you invest either. What about the entrepreneur who’s identified a target niche in a market, who has a big problem that either no one has solved, or no one has solved well? This is getting intriguing, but this still probably won’t be what convinces you to invest. To understand why, go outside and drop some food on the ground, then see how long it takes for ants to swarm all over the food. This analogy is similar to what happens when an entrepreneur introduces a good or great idea to a marketplace, and begins to make money off of the idea. Once competitors see opportunity in the marketplace, they start crawling out of the woodwork (and one or more of these competitors is likely to be better funded than the first mover into the market).
So, what exactly is going to get you to part with your money? The answer is, an entrepreneur who demonstrates the ability to execute on their vision (based on who they’ve surrounded themselves with). In a recent interview, Warren Buffett repeated the following quote: “You’re the average of the five people you spend the most time with. In other words, who you spend time with influences the person you become.” If you want an accurate predictor of entrepreneurial success, ask an entrepreneur to describe their network to you. You’ll want to know who’s in their network, what their relationship is with each of these people, and how they’re leveraging their relationship with these people to further the interest of their business. If in describing their network to you, an entrepreneur describes their relationships with their leadership team, their board of advisors or directors, their strategic alliance partners, and their marquee customers, you’ve found a winner!
If you found this article helpful, please share it with other entrepreneurs in your network. If you have questions about anything in this article, or would like my insight on a question about any aspect of the entrepreneurial process, please connect with me on Facebook (https://www.facebook.com/thinkbigwithgeoffreykent), LinkedIn (https://www.linkedin.com/in/thinkbigwithgeoffreykent/), or Instagram (https://www.instagram.com/thinkbigwithgeoffreykent/). I also believe that 50% of entrepreneurs fail within 5 years, because they lack the resources to properly execute their vision. Leveraging what I’ve learned over a 40+ year successful entrepreneurial career, I’ve developed a methodology to help entrepreneurs build their unique customized strategy for responsibly scaling exponential business growth. To gain access to my 7-week online course, collaborate with like-minded entrepreneurs through the exclusive “Think Big” Facebook group, regularly communicate with me, and gain access to my extensive professional network, connect with me on my course page (www.thinkbigwithgeoffreykent.com/).