While knowing a business has the potential to grow and really make a social impact is important to investors, I also feel knowing the entrepreneurs are capable of upholding the business is important as well. This comes from a lecture I went to a few weeks ago at UVU that was about raising funds when beginning a business. Even though the lecture was not aimed toward social entrepreneurship, but rather just plain entrepreneurship, the message is still applicable. I actually wrote an article for “The Universe” about what I found and pulled most of this from that, but here it is.
Kent Thomas president of Advanced CFO Solutions spoke at the event. CFO Solutions funds entrepreneurs. Here are three of his six criteria I would like to present:
1. The number-one item investors look at is the potential company’s management team. A team needs well-skilled, dedicated individuals who can bring positive results.
2. Investors need to know their money will be used wisely. Wearing an Armani suit and driving a Mercedes is a red flag for investors. They want to see entrepreneurs who can manage their own money before they write them a check.
3. Be honest with investors. Explain to them why your business may or may not succeed, and don’t overestimate your money-making abilities. Nothing turns off investors more than telling them you plan on making $7 million in the first year.
Propelling a business that makes a significant dent in social betterment depends largely on the shoulders of those leading it. Founders must be well-educated in the area they are working so they can thoroughly understand a problem. They need the personality to connect with a myriad of people. They need the intellect. They need the humility. They need the dedication and passion while still maintaining realistic expectations.
When entrepreneurs possess such traits, investors are more likely to trust them with their funds. Of course, the other part of it is entrepreneurs need to be straight-forward with investors. As Kent Thomas pointed out in the lecture, entrepreneurs need to show investors potential flaws in their business plans; they shouldn’t try to hide anything. Time will eventually uncover business flaws anyway.
So there it is, any successful business begins at the base–the entrepreneurs.