Hartford Business Journal

www.HartfordBusiness.com February 8, 2016 • Hartford Business Journal 21 BIZ BOOKS Creating the perfect pitch to attract capital "G et Backed: Craft Your Story … " by Evan Baehr and Evan Loomis (Harvard Business Review Press, $35). An idea has its purpose: piquing the interest of prospective investors. But when it comes to attracting their money, the problem-and-solution facts must sell the idea. How? The authors' model to attracting investors uses a 10-stage pitch deck. What's that? It's a presentation that shows "everything that's valuable about the startup" — its vision, its team, core elements of its business model, insights into customers and how it will differentiate itself from competitors. Tying all of these ele- ments together requires research, thoroughness and clarity. You must also think of an investor as a customer-stakeholder. Specific topics and questions investors want answered include: Opportunity — What are the trends and voids in your market? How will you capitalize on them? How can you scale the firm? Your answers have to show you know the market as well or better than the potential investors. Problem — What is it? How many people feel the pain? Stories of people in pain person- alize the problem and quickly take potential investors from the "opportunity" to the in- the-trenches reality of the problem's effects. Solution and Traction — Show inves- tors how your product solves the problem. Videos and hands-on demonstrations drive home your points. What evidence do you have that shows why cus- tomers would choose your solution? Your answer must include a "clear sales process to attract, edu- cate, qualify, close, and provide after-sale ser- vice." How would that process change under rapid growth? Business Model and Funding — What's unique about your product (e.g. ease of use, faster, cheaper, etc.) that will create space for it in the current market? Can those in the marketspace easily and quickly produce knock-offs? How does the business make money and when will it become profitable? Your answer must deal with pricing as it affects customer acquisition and retention costs. Investors want to know about profit margin, cash flow, burn rate (i.e. how much cash you're losing each month), breakeven and specifics on how their funds will be used. Key takeaway: "If you want advice for your startup, ask for money. If you want money, ask for advice. To succeed you will need both." • • • "The Genius of Opposites: How Intro- verts and Extroverts Achieve Extraor- dinary Results Together" by Jennifer B. Kahnweiler (Berrett-Koehler Publishers, $17.95). Through interviews with a number of introvert and extrovert business part- ners, Kahnweiler found how these seemingly oil-and- water partnerships "created something they could not have produced alone." Her working-with- opposites, give-and-take model is as simple as ABCDE: "Accept the Alien" — You're not going to change your partner's approach. But partners can learn to understand how their perspectives and methods could mesh. It's all about constant communication. Talk- ing about your differences identifies what each brings to the table. "Bring on the Battles" — Initial dis- agreement challenges both to come up with better decisions and solutions. Why? While each sees a situation differently, both have to remember the goal. "What works best?" trumps "my way." "Cast the Character" — Realize that different situations require the opposites to take on certain roles. Learn to identify which situations and roles play to your opposite's best. "Destroy the Dislike" — Think in terms of 'we', not 'I.' When there's mutual respect for what each part- ner has to offer, friendship develops and they can open- ly discuss what's going on. Also, treat "we" as a learning opportunity. "Each Can't Offer Every- thing" — By sharing input and the stage, partners develop a wider range of alternatives for themselves and their clients, 1 + 1 = 3. The bottom line: It takes two to tango; it takes two to tangle. When partners tango, they learn to share the lead. When they tan- gle, progress halts. n Jim Pawlak is a nationally syndicated book reviewer. Jim Pawlak THE RAINMAKER Capitalizing growth in 2016 By Ken Cook T he New Year is upon us; optimism abounds and there is usually an overrid- ing belief that it will be a strong growth year. And as many of you know, growth can be a stern taskmaster. Growth requires more of everything, including time, resources, energy and especially money. Every business at some point needs money, whether it is in a startup mode, financ- ing growth, or just overcoming a rough patch. For startups, the expectation is that the financing is self- funded. Jobs and Woz- niak started Apple in a garage; Gates and Allen sold computers out of their house. The transition from self-funding to using other people's money is usually a function of proven capability matched with opportunity. It's at this juncture that many small businesses either fail or just stall out. Lack of capital is frequently cited as the cause of a business failure in this early stage. If truth be told, it is not the lack of capi- tal that caused the business failure. Rather, it is usually a poorly advised venture or lack of owner skills that precipitates failure. The inability to properly capitalize the business is merely a symptom. To avoid the symptom of poor capitaliza- tion, know who you are and where you are going. Successful business owners have an understanding of financial issues and finan- cial planning. Foundational to this is the busi- ness plan and cash flow projections. These two tools reflect historical performance (if it's an existing business), and future projec- tions based on market knowledge. Successful business owners know their markets and their customers. There is no guessing as to why customers buy; there is intimate knowledge of customers sup- ported by strong relationships with those customers. Relationships and knowledge translate into increasing revenues and even more customers. Whether starting out or whether the capi- tal is needed to finance growth, be clear on the requirements. Know what the money is intended for, and more importantly, how the money will make the business more success- ful. Once you know this, you then can deter- mine how much money you need. So as you look out over the next 11 months, be clear on your goals and expectations. Clar- ity of thinking and planning is a very enticing characteristic for an investor. Every investor knows that their capital is a tool. The investor wants to use the tool wisely. Investors, banks, angels or other sources of capital are not looking to fund just the entrepreneur. They are looking for two things: To fund a viable venture that is poised for growth and mobilized and driven by a capa- ble entrepreneur. The hope of the investor is that by fund- ing a viable and growing venture, their capital can be used to produce premium returns on the investment. The entrepreneur's job is to prove the case that the premium returns are not only possible, but probable. Cash is king. Proper capitalization can drive growth. The entrepreneur's task is to prove that the growth of the business is attainable, sus- tainable and profitable. If that can be done, then there are sources of capital that will help that business get to the next level and make the next year very profitable and successful. n Ken Cook is the co-founder of How to Who and co-author of How to WHO: Selling Per- sonified, a book and program on building business through relationships. Learn more at www.howtowho.com. Ken Cook ▶ ▶ The transition from self-funding to using other people's money is usually a function of proven capability matched with opportunity. It's at this juncture that many small businesses either fail or just stall out. ▶ ▶ ' If you want advice for your startup, ask for money. If you want money, ask for advice. To succeed you will need both.'

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