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Entrepreneurs can be Penny Wise & Pound Foolish

December 9th, 2011 · 1 Comment

Recently,  I was out to dinner with some of the movers and shakers in the entrepreneur and capital world in the Southeast.   Through the course of the evening we kept coming back to the topic of what entrepreneurs do that make or break their success in raising capital for their business. And then AGAIN, last night at a seminar, an investment banker and I got to talking about this very same topic.  When People who have access to the capital and know what it takes to attract the capital, get into conversations with Entrepreneurs on what they need to do to launch, grow and succeed in business, and they need outside capital to do it….there seems to be a common psychological deficiency among the  entrepreneurs that “never get it”.

Investors and Brokers reading this will be nodding their heads as they read these insights.   Some entrepreneurs will think “I know someone like that” or “I used to think like that”.  Some entrepreneurs will think, what in the world is this lady talking about — because they have built a fundable business and they have attracted capital and do hire the expertise they need when they need it.  And yet others will think, what in the world is this lady talking about and they still won’t “get it”.
Tell me what you think about these observations….

1.  Companies are getting funded – case in point: I had to reschedule and then struggled to find a good line up of qualified companies to present to our last Atlanta Angel Investor Club. Three of the companies that had been approved to present, cancelled because they had either received funding  or committed capital before the event. So if an entrepreneur is not getting funding, it isn’t because there isn’t money available.  Reality check:  It’s them – not the investors.  This was true in 2002, in 2009 and in 2011—just because the market is down, doesn’t mean the capital is gone.

2.  Entrepreneurs will be penny wise and pound foolish -They often will put every cent they have and leverage their future trying to get their business going, flail around trying to attract capital, and fail.  They’ll blame those “ignorant” investors that “just don’t get it”, the economy, their geography or whatever and whomever they can to deflect the reality that they simply don’t know how to raise capital – identify it, attract it, close it — and they don’t know how to position their business in such a way to make it attractive to investors. Ever heard the definition of insanity is doing the same thing over and over yet expecting the results to be different?
Then, when that CEO is desperate, the company is on life support and has no money left, they can’t make payroll or the next product launch milestone, they finally seek help.  Six months earlier, they will have talked to the very people that could get them access to the capital and position their business for success, and they won’t want to hire that expertise.  Then they’ll come back to that same expert and say “I have to get money in the next 30 days, can you help?” This is when we in the start up and early stage investment world have a collective laugh mixed with tears when that entrepreneur hangs up or walks away.   They won’t hire the expertise they need, when they have the money, to get across the goal line—penny wise & pound foolish.  They let their ignorance and false sense of entitlement stand in the way of their success and their company’s success.

3.  They don’t take the time to put a capital strategy in place that maps to a cohesive business strategy. Nobody can understand how they will make money because they don’t really know how they are going to make money.  So they don’t really know how much money they will need now or in the future.  They seek too much money too soon to warrant their valuation, so there is a disconnect with the type of capital they are seeking.  They don’t take the time to actually learn how to raise capital effectively.  Or, they fall victim to the “poor CEO vs rich founder” syndrome in their terms offered. And all of this could be fixed if they just took the time to engage and get their sequencing correct, their messaging on target, and their capital and business strategies aligned.

If any of these points are “aha” moments for you or sound familiar– for you or an entrepreneur you know, then time is of the essence.  It is the saddest thing when innovation never gets to market that would better our world because an entrepreneur who doesn’t know what he/she doesn’t know or worse, knows that he/she doesn’t know what they need to know or have the skills/experience but feels he or she is “entitled” to that information and expertise at no cost just because they are a “poor entrepreneur”.

I call these kind of entrepreneurs Sloths.

Don’t be a sloth….be a gazelle, be a cheetah….Learn the keys to unlock Your most direct path to success, blast through limitations and turn YOUR Business into a HIGHLY FUND-ABLE business!

Don’t Miss this limited opportunity!  Take action now so you can get on the right path to attract the capital you need to bring your innovation to market, grow your company, and create wealth for you, your family and your investors.

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Tags: Entrepreneur Biz-Buzz · Entrepreneurs Seeking Capital Corner

1 response so far ↓

  • 1 http://tinyurl.com/goodgrant07796 // Feb 5, 2013 at 2:09 pm

    Your blog, “Entrepreneurs can be Penny Wise
    & Pound Foolish | Entrepreneur BlogSpace” was truly worth writing a comment down here in the comment section!
    Simply just wished to say you truly did a tremendous job.
    Thanks for your effort -Olive

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