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Over the course of my career, I’ve seen some brilliant business ideas, as well as a fair share that I knew didn’t stand a chance for success. I’ve been on both sides of the investment process: Over the years, I’ve owned a number of small businesses and pitched investors on investing in my companies, and I’m also an angel investor who has had other small business owners pitch me on investing in their companies. I wish I could say I had the secret to successfully distinguishing a good business plan from a bad one. Unfortunately, I don’t. I do, however, know four things that will differentiate a good small business from a weak one:
1. A great idea. If the idea is not unique, doesn’t have a wow factor, or doesn’t answer a need in the marketplace, you’ll never be able to sell your product or service, let alone convince investors to give you money.
2. A great leader. You may not get the money you’re hoping for on the first try; a good leader will be patient through the process. A strong leader will have the vision and foresight to have prepared a contingency plan to enable the company to take the ball down the field as far as possible until funding is secured.
3. A great team. A great team will be committed to making the business a success, regardless of the situation. Good team members will not look to jump ship at the first sign of adversity. Instead they will look for innovative ways to improve the odds of securing investment money—or get along without it.
4. Great timing. Even with a great idea, a great leader, and a great team, the decision to invest can be as much about timing as anything else.
There is a lot to be said for a company that knows it has a good business as well as the patience and contingency plan to persevere without the immediate gratification of investment money. A business can learn valuable lessons from this type of adversity and the experience gained as a result will reflect in subsequent pitches to investors.
Founder, President, CEO
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