Need venture capital from a business investor? These tips are from Robert Herjavec’s book Driven. He’s one of the stars of CBC’s Dragons’ Den – he’s an honest, smart, motivated, encouraging businessman.
“Greed combined with a lack of understanding of basic business principles has destroyed many dreams of pitchers on Dragons’ Den,” writes Herjavec in Driven: How To Succeed In Business And In Life. “…[also] very few businesspeople hit a home run in their first time at bat. Even fewer do it without a business partner who understands the game and has the interest and wherewithal to help them score big.”
O’Leary’s Cold Hard Truth isn’t nearly as useful or practical as Driven and Persuasion. It’s all O’Leary – more like a memoir or autobiography than a true business book. He mentions a few tips for attracting investors and pitching startup businesses, but it’s mostly an ego trip. Herjavec’s Driven and Dickinson’s Persuasion are far better business books.
Tips for Attracting Business Investors – Robert Herjavec
Remember that you CAN turn your dream company into a thriving business! Even part-time hobbies can become successful businesses.
Know how to value your venture
Don’t let greed, ignorance, or misplaced courage mislead you to overvalue your business. I often watch Dragons’ Den, and I often hear the dragons tell entrepreneurs that their valuations are totally off. And that affects whether or not the dragons will invest in the company.
“Whether your company’s bank account is in overdraft or you have a million dollars in cash in your coffers, neither you nor your accountants dictate the current price,” writes Herjavec. “Your company is worth what the market says it is worth…Many pitchers have walked out of the Dragons’ Den totally convinced that our valuations of their businesses were wrong. The truth is we are never wrong because, in that particular market, our valuation is the only one that matters.”
Learn how to do a financial forecast
Even your business doesn’t have a strong valuation or sales record, you can improve its perceived value. “Look at similar companies, some of which may be your competitor,” writes Herjavec. “Try to get a handle on their size and growth record. Can you make a reasonable case for duplicating their success with the added benefit of a unique improvement in quality or price?”
Financial forecasts are complex, but if they’re done properly they can attract investors in your business. This dragon recommends being both conservative and realistic.
Base your business decisions on facts
“Enthusiasm is a wonderful quality, but driving blind is unwise, whether it’s behind the wheel or behind a desk,” writes Herjavec in Driven. “No matter how wonderful you feel your product or service may be, if it doesn’t strike a strong enough chord with enough customers in your market, you will fail.”
That’s another thing I see when I watch the Dragons’ Den: many entrepreneurs are blinded by their faith in their product or service. They can’t or won’t see the facts, which is why dragon O’Leary is so hard on entrepreneurs. “I’m not here to make friends,” O’Leary says all the time. “I’m here to make money.”
If you’re struggling to balance faith and passion with reality, read How to Solve Problems at Work – it describes Marcus Buckingham’s Go Put Your Strengths to Work and will help you stay focused on building your business.
Invest (yet again!) in your business
This tip for attracting investors for your business – whether or not you’re pitching to the Dragons’ Den – is from Valuation: More Than Just Numbers on the CBC Dragons’ Den website:
“Whether the entrepreneur bases the valuation on assets, cash flow, book value, business comparison or any other method, it requires more than a financial statement. For established businesses, valuation involves analyzing several years of performance history along with an outlook of the future, including the economy and the company’s anticipated performance.”
The best way to evaluate your business is to hire an expert. A business analyst will show you how to create an accurate, promising financial forecast, help you figure out what you should focus on, and teach you how to downplay your weaknesses and upsell your strengths.
For more tips from the Dragons’ Den, read Herjavec’s Driven: How To Succeed In Business And In Life.
If you’d rather deal with banks than investors, read How to Get a Small Business Loan.
Robert Herjavec heads The Herjavec Group, one of Canada’s leading and fastest growing IT security and infrastructure integration firms. During the initial stages of the dot com craze, he realized that technology was the ticket to serious money. By night, he launched BRAK systems, his first technology company. BRAK soon became Canada’s top provider of Internet security software worth a reported $100-hundred million dollars. Robert sold his company to AT&T in 2000. But that was only the start. He then helped negotiate the sale of another technology company to Nokia for $225 million dollars.
If you have any tips for attracting business investors, please comment below! Especially if you have Dragons’ Den experience…