Address Obstacles Head On
In the first five steps, you created your complete capital raising plan and you started to meet with investors.
In most cases, raising money is more like a marathon than a sprint! Day in and day out, you will experience all kinds of highs and lows and you need to be prepared to address what comes up so that you can stay on track until you reach your goal.
You’ll need tools in your tool box that help you deal with
- meetings that don’t go well
- feelings of exhaustion and overwhelm
- objections from potential investors
Here are a few of my favorites:
1. Examine your beliefs about asking for money and growing your business.
Do a brain dump in your journal about all those beliefs and realize that there is very little, if any, truth to them. Once you drag them out into the light of day, you can loosen their grip on you by noticing how ridiculous most of them are!
2. Notice the positive side of the things that you don’t like about yourself.
Just about every “negative” characteristic has a positive side. For example, if you worry that you are too cautious and don’t jump on opportunities quickly enough, think about all the times that quality has actually helped you avoid mistakes. Reframe the negative description of that trait to focus on the positive. For example, say to yourself, “investors would be very lucky to invest in my company because I am such a careful steward of resources.”
3. Remember that investors find it very challenging to identify good opportunities.
Remind yourself every day that, for the right investors, what you’re offering to them is at least as valuable if not more so than what you’re asking for.
When talking to potential investors, start by asking them a lot of questions about what’s important to them. If it becomes clear that what you are offering is a good fit for what they’re looking for, make your offer.
4. Be willing to say no to the wrong investor.
If your gut tells you that a potential investor is not a good fit, listen to that. Do as much due diligence on potential investors as they do on you. And listen to both your head and your intuition (body, heart, spirit, gut . . . .) when deciding whether to accept an investment.
5. Remember that objections don’t always mean “no.”
In the world of sales, objections are often seen as a “buying signal.” In some cases, when investors ask difficult questions or make critical statements, it is a signal that they are interested but need to know more to feel comfortable. These questions and statements can be a cause for rejoicing – they are often a signal that you are getting closer to a yes!
Preparing to address obstacles is the sixth step in my Right Investor Formula.
Here is an exercise we recommend in order to make sure you get your fundraising done within a reasonable amount of time.
1. Imagine you have reached your fundraising goal. You are looking at the list of all your investors and how much each one invested. What is the lowest amount that someone invested and what is the highest amount? Try to create a clear picture in your mind of your investor list and the amounts invested.
2. In your imagination, scan the list and estimate what the average investment size per investor is. For example, you may picture that you’ll have some people come in at $5,000, some at $10,000, a few at $25,000, maybe one or two at $50,000, and one at $100,000. In that case, you may estimate the average per investor to be $20,000. You can use this tool to decide how much you’ll ask for from each potential investor: http://www.jennykassan.com/blog/7-steps-for-making-the-big-ask/
3. Now, take the total amount you want to raise and divide it by the average per investor. That will tell you the approximate number of investors you’ll have when you reach your goal. So, if you want to raise $400,000, you’ll end up with around 20 investors.
4. Multiply that number by 10. That is the approximate number of potential investors you’ll need to talk to about your offering. (This assumes that an average of one out of ten people you talk to will say yes—you may do much better than that, but it’s best to be conservative). In our example, this would be 200.
5. Divide that number by the number of weeks you would like to devote to reaching your funding goal. This is the number of people you will contact per week about investing. So, if you’d like to reach your goal within six months, divide 200 by 26 weeks—you need to contact 7-8 people per week.
6. Assume that for each contact you’ll need to spend 30-60 minutes on average. Multiply the number of people you’ll talk to per week by the average number of minutes you think each contact will take. That is the total number of hours you should schedule into your calendar for contacting potential investors. Add at least half that many hours to give yourself time to follow up with people who haven’t yet given you a definitive answer. In the example above, I would assume eight hours per week plus another four for follow up—so a total of 12 hours per week should be spent contacting potential investors.
7. Now block out that time in your calendar for the number of weeks you gave yourself to reach your goal.
If you use this method, you’ll keep your momentum going and get that fundraising done before you know it!
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