Typically, when someone is overselling themselves or their product, I tend to think they have something to hide, or they just have a problem shutting up which is a deal killer in itself.
New York, New York (PRWEB) February 26, 2013
MJ Gottlieb from the start-up and entrepreneur blog, N2ITIV Solutions, reveals seven of the biggest mistakes people make when raising money for start-ups.
Gottlieb believes some of the biggest reasons are actually self-inflicted as many entrepreneurs tend to get in the way of their own success by trying too hard and saying too much. Gottlieb hopes that revealing the most common mistakes will give the entrepreneur better guidance on ways to raise capital and secure an investment. The following are what Gottlieb proclaims to be major turn-offs to investors and companies.
The first big three are problems with overselling:
1.) Over-selling themselves: Gottlieb believes there is a huge difference between confidence and ego. Nobody wants to deal with egos because it is a disaster waiting to happen. Confidence on the other hand is quite the opposite and is of great value.
2.) Over-selling the product or service: Gottlieb adds that the product or service should be presented once. When individuals fail to explain their product or service correctly the first time, the odds are the attention will be lost when they come back around and try to explain it again.
3.) Overselling the team: When pursuing an investment, the company needs to put its best foot forward and that means bringing in the key team to assist in the presentation. If one person discusses what the rest of the people sitting in the room can do without letting them speak for themselves, that is a red light. Each member of the team should discuss his or her own strengths. There is strength in numbers. Gottlieb states, “Typically, when someone is overselling themselves or their product, I tend to think they have something to hide, or they just have a problem shutting up which is a deal killer in itself.”
The next two mistakes that may prevent people from securing a deal involves personality conficts:
4.) The person looking to raise money is a potential headache: Typically, non-institutional investors tend to invest in brands that not only will make them money, but also make them money with the least amount of headaches during the process. If the person behind the brand seems like he or she may be a headache to deal with, that is often an instant reason to kill the deal.
5.) Talking when they should be listening: The person who is in pursuit of capital must give time for the potential investor to respond during the presentation. If they try to talk their way through the presentation without leaving room for engagement that is another good reason not to invest.
MJ adds, “I have learned that when I am in a room with someone who has more experience than me, the more I keep my mouth closed, the more I learn. There have been many times when someone has refused to invest, but I still walk away a winner, because I learned something from the meeting that I did not know before I went in. I can then use that information to fill in the holes from the previous meeting and turn them into strengths in my next one.”
Other issues that become problematic when raising money for start-ups happen when entrepreneurs kill their own deals by throwing around unrealistic numbers:
6.) Unrealistic valuations- The company is asking for a percentage that is not in line with what the company is worth.- Gottlieb feels that there is a reason why someone is pursuing an investment, namely the company feels it needs money to survive. Gottlieb adds, “A great tip to raise money is to understand both sides of the table. They need to understand the value of the person throwing them the lifeline. Unfortunately, they tend not to look at it that way, however when you strip it all away, that is the exact reason why they are sitting in front of you.”
7.) Unrealistic revenue projections - Numbers are the easiest thing to come up with but the hardest thing to justify. Especially when the company hasn’t even gone to market yet. Revenue projections without having done any legwork is baseless.
This is the first of a series of discussions on the pursuit of capital and securing investments. Gottlieb hopes to offer entrepreneur tips that can help aspiring entrepreneurs by mainly telling them of the key areas they need to avoid when pursuing the deal. This is very much in line with Gottlieb's book, How To Ruin A Business Without Really Trying, which has the subtitle, “What Every Entrepreneur Should Not Do When Starting A Business”. His book is being released in mid-March.
N2ITIV Solutions, founded by MJ Gottlieb and Gary O'Neil, is a strategic consulting firm specializing in the implementation of creative business strategies to help aspiring entrepreneurs and small businesses increase their brand awareness and monetize their businesses.
For more information, please visit http://www.n2itivsolutions.com