Humm, I always equated my business consulting career with the medical profession in terms of doctor/patient relationships but even more so after reading a recent article in the WSJ (10/24/18), titled a DOCTORS prayer “Grant that my patients may have confidence in me and in my art, and follow my directions and my counsel.”
This is my credo, almost verbatim; unfortunately, many of my prospects, especially pre-revenue startups, who I hope to convert to a client, are reluctant to pay for my hard-earned advice and try to take what I share with them and do it on their own and sooner or later their decision comes back to haunt them with no funding or other remedies that could have launched their dream.
We just had that experience when one of our clients, innocently attended a network funding event and was approached by a group out of Colorado and fortunately our client contacted us to follow-up on the lead and not surprisingly so, the lead and the tentative offer died as soon as we called representing our client, as the group who made the offer knew they would not pass our validity test and three weeks was wasted in the process of the follow-up..
Circling back to the medical profession, and using applicable examples of patients/clients not listening when a doctor tells a patient to lose weight, or exercise more, or control their diet or stop smoking and they do not listen, the result is usually a funeral at some point in the life of the patient, thus my analysis of our patients, who do not listen and their project eventually dies and/or has been so shopped-around that no one will touch it.
This Doctor’s prayer is advice specific in my world as in theirs. My synergy partners and I provide counsel, which falls on deaf-ears or maybe deaf brains; such as, advising a startup that the first thing they need is a business plan, not prepared by the entrepreneur him/herself but by a professional preparer, who understands the target audience (banker, investor or partner) and drives the interest of each target for maximum effectiveness.
Well, what do many of these aspiring entrepreneurs do? They go to a website and download a generic template fill-in the blanks and vioila they think they have a worthy business plan, though probably missing many categories a prudent investor/lender would require; such as, ROI-timeline, best/worst case scenarios, exit strategies, percent of ownership (this is a killer for the founder, who typically is reluctant to give up control) and passes on many different deal structures that would have performed for everybody involved; only to change their mind and be equity flexible when it is usually too late and the investor(s) have moved-on or will take more equity than originally discussed because the founder is in a state of panic as he/she realizes that they are at the preverbal end-of-the-road.
I have the above situation as we speak. A hard-working founder began his journey only wanting to give up 25% of his company to an investor, regardless of the perceived valuation of his “IP” and proven field test of his engineering marvel (proof of concept) then when he was offered $1M for 51% he said no, now he wants to sell the whole company after repeated attempts to find investors, all of whom left the party, no longer interested.
Then there is the founder, who doesn’t think his venture needs a business plan of the type we are experienced to write, and we try to explain that a search for funding is not different that trying to sell your home or car without photos, descriptions and specifics. Yes, it cost money to have a professionally written business plan prepared but the odds of that plan raising startup and working capital will have been improved by, at least, double the efforts without it, just like spending money to advertise the sale of a home or car has the same positive effect.
We here at M & A have a file cabinet full of examples of patients, who did not listen to us and many are still floundering around, going to network events where it is historically known that sharks, vultures and other unnamed opportunist are circling the prey (the founder) for a DEAL that usually does not turn-out the way it was initially purposed!
Mitchellette and Associates, LLC
2927 Dean Pkwy. Ste. 300
Minneapolis, MN 55416
Office Cell: 612-715-9217