Listen and learn
Friday, February 29, 2008/
I met with a start-up IT company last week. They wanted feedback on their plan, but when I was honest with them the reaction wasn’t pretty. Here’s what happened… I met with a start-up IT company last week. They wanted feedback on their plan, particularly the financial forecasts.
It was tough going.
I’d spent about an hour looking over the plan and figures that they sent me before the meeting. I’d made some notes and gathered my thoughts together about the fit between the marketing strategies, the sales projections and the financials.
When we sat down together the first thing they did was to present me with a new set of financials. So how did I feel about that? Not good, I can tell you. Basically wasted an hour of my time.
I looked at the new figures and made comments along these lines…
- Going from zero to $2.8million in 12 months is an ambitious target.
- Then going from that to $22 million in year three is nigh on impossible.
- I couldn’t see any solid marketing strategies and sales tactics that would result in generating those sales figures.
The reaction from the guys was almost aggressive. They simply couldn’t understand why I didn’t get it. We might as well have been speaking different languages.
I mentioned that putting in their business plan “a sales plan will be developed to….” is just not going to do it for an investor. I suggested that they actually work out exactly how they were going to make sales – real tangible plans with names, dates, alliances, resellers etc identified and approached.
The only way your investor will get a return on investment is when you make lots of great sales. Without sales you simply don’t have a business. Too many entrepreneurs gloss over the sales process in their business plans.
We had another coffee and the meeting settled down a little.
The really good news was that an angel investor had contacted them a few days ago.
Their reaction… “We’ll spend a couple of weeks getting the plan right and then start negotiating a deal.”
I asked them about their current cash flow and how long they can survive before getting an investor on board. They had about eight weeks left. Another blow. Now we’re getting into Mission Impossible territory. They didn’t have TWO WEEKS to get the plan right. I suggested that they get in pizza and lots of coffee, lock themselves in a room and sort the plan in the next 48 hours.
The guys wanted to know what in the plan should be revised. Well, obviously the forecasts needed to be revised and they needed to put more tangible sales and marketing plans in place.
When we got into the detail again I was met with very defensive reactions. These guys weren’t listening. They spent most of the time telling me why it would work rather than using the time (which they were paying for) picking my brains. They could have discussed the relative merits of my comments at home. Why spend money to hear someone’s comments and then not let them talk.
And that happens more than it should. If you’re paying a professional for advice then let that professional give you advice. Sit quietly in your chair and listen to what they are really saying.
Unfortunately, this was a very unproductive meeting.
When professionals and advisers pass on comments, they are not “attacking the entrepreneur”. They are simply providing their opinion about your business proposal. It is not personal.
I understand why this happens – the pressure is on, entrepreneurs treat the business as “their baby” and nobody likes to be told that their baby is ugly.
Keep in mind that advisers are there to help, to give you feedback – it may not be what you want to hear. At the end of the day you can decide what you’ll take on board.
Leave defensiveness and aggression at the door. Chill out and relax. It will be a much better meeting.
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.