Hit it hard
Hit it hard. What do I mean? Here’s what…
You go out and raise $400,000 from angels and then spend 50% of your time over the next 12 months getting more money. Just hit it hard. Go out and get $2 million right up front; then you can spend all your time on your business.
And if you think that it will be harder getting the $2 million, here is an interesting story from Losing my Virginity by Richard Branson:
“However tight things are, you still need to have the big picture at the forefront of your mind. The most vivid proof of this came at the depths of the recession 1992. At the time, I was trying to raise money to install individual seat back videos in all our aircraft.
“I have always believed that Virgin should offer the best in-flight entertainment. We needed $10 million to install the equipment. Nobody at Virgin Atlantic could raise the necessary funding and we were all sitting down at Crawley one day in despair, on the point of giving up, when I thought I would try one last gamble.
“Nervously, I picked up the telephone, called Boeing and asked to speak to the CEO, Phil Conduit. I asked him whether, if we bought 10 new Boeing 747-400s he would throw in the individual seat back videos. Phil was amazed that anyone was thinking of buying planes during that recession, and he readily agreed.
“I then called Jean Pierson at Airbus, and asked him the same question about the new Airbus. He, in similar financial straits, also agreed. After a few further enquiries, we discovered that it was easier to get $4 billion credit to buy 18 aircraft than it was to get $10 million credit for the seat back video sets. As a result ,Virgin Atlantic suddenly had a brand new fleet of planes. The youngest and most modern fleet in the country.”
An early stage company needed $5 million for their expansion. Things were going well and there were no major dramas. But after 43 pitches to VCs, the founder was tearing his hair out. One night in utter frustration he sent off an “angry” email to the latest VC pointing out all the reasons why they should invest. He wasn’t offensive but his frustration showed through.
Guess what? The VC asked him back and ended up putting in $7.5 million. He got more than he asked for. But it was just as well because they burned more cash than planned and needed every penny.
“Hit it hard” applies to everything you do.
Make decisions on staff very quickly. Work out if they are what you need in the first few months. Don’t prolong this process. It will be painful and expensive if you do. And the biggest cost won’t be the salary it will be the lost revenue in not getting the job done. If they’re not working out then move on and move on quickly.
If a particular marketing strategy isn’t working then change it. Be upfront with your investors and tell them that you got it wrong. Don’t wait months and months trying to make something work.
What I see a lot in start ups is wasted time on projects, alliances, etc that have little chance of success. This is a tough one. Yes, you need to check out opportunities but you don’t need to check out all opportunities. But where is the line?
What I do know is that most entrepreneurs DO waste time on useless opportunities. Hit it hard on this one. Before you waste too much time really do your homework, talk to your network and advisers. An experienced businessperson can smell time wasters a mile off. Take advantage of their experience.
You’ll get better at this but be tougher than you think you need to be.
Figure out if it’s wrong fast then fix it fast.
Till next week…
Gail Geronimos, is the founder of Achaeus, which helps entrepreneurs develop their businesses and she has just started a new site www.pitchingtoinvestors.com with tools and tips about how to develop killer presentations to raise capital.
To read more Gail Geronimos blogs, click here.