I was asked to look at a business opportunity the other day on behalf of a mate and fellow member of the Entrepreneur’s Organisation in Melbourne.
He is currently sailing around the world with his family for three years, after successfully selling his business. It made me realise how I was able to use all of my experience to gauge a complete position on a start-up in a phone call, which lasted 12 minutes with the founder along with probably 15 minutes of prior research.
As a result, I thought it would be useful to share my screening process, which helps me form an opinion quickly as to whether to continue the conversation.
I’ve seen a lot of pitches and get approached by a number of entrepreneurs who want and need help. Unfortunately, ‘time’ is the scarcest resource, so it’s critical to get it right before committing to anyone.
I’ve also got enough of my own opportunities to work on, but generally happy to hear someone out as it’s great to connect with smart, motivated entrepreneurs and stay in touch with them for the future in the event that we can’t work together today.
Some entrepreneurs want money, others want guidance, but before I can work out what I think they really need, there’s a bunch of things I need to assess before actually looking at the business itself.
Here’s my approach: Before I start, I warn them that I’m about to bombard them with questions to gain a quick picture, and likely to cut them off to avoid rambling, so now I’m less likely to offend and at least very clear about the next 10 or so minutes!
It’s imperative to understand their background, experience, skills and motivation as it’s initially the founder driving the business forward:
- What’s your background?
- Which high school did you attend?
- What did you study at uni?
- What grades did you get at school and uni?
- Did you work while you were at high school or at uni?
- What subjects did you love?
- What do your parents do?
- What do your brothers and sisters do?
- Where do you live?
- Have you had to pay rent?
- Who pays your credit card bill?
- What are your monthly living expenses?
- What are you passionate about in life?
- What are you really good at?
- What do you suck at?
- Why do you want to be an entrepreneur?
- What hours do you work on your start-up?
- What time did you get out of bed today?
- Who have you worked for?
- What skills did you learn?
- Have you been in business before? (If not – I stop there. I’d rather someone who has tried and failed but not someone too green.)
- Who funded it, how did it go?
- Have you failed in a business before? If so, what were your biggest lessons?
- What are the last three business books you’ve read and when did you read them?
I’m looking for someone smart, motivated, ambitious and with a strong work ethic who has no option but to succeed. I like to understand their ‘breed’ and potential culture fit. It’s often the family background that helps establish some pattern for work ethic, motivation and values set.
Would you rather back a maiden horse who has never won a race or likely to come close, or back a maiden who’s got great potential and willing to do what it takes?
If the person is not suitable, it would only be out of curiosity sake to hear about the actual business opportunity.
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