Your goal in business is to show how your products and services are unique and satisfy a customer’s needs.
In dealing with a lender or investor you also have to differentiate yourself. You want to show financing sources why they need to “buy” you—or in other words winning business financing.
So what is the golden key that can win business financing for you?
The Best Differentiator
“Great things in business are never done by one person. They’re done by a team of people,” states Steve Jobs. This theme is stated over and over by all lenders and investors.
The best kept secret to winning business financing—lenders and investors want to fund exceptional management teams.
In fact, financing sources buy the management team and not the project. Years of experience shows that superior management teams will always get resources over groups that just have a great idea and well-written business plan.
A management team that has a solid history of success makes lenders and investors feel more comfortable about their ability to execute. No matter how great your forecasts and business plan strategies, what makes a winner is effective execution – and that’s what a first-class management team provides.
A winning track record lessens the risk factors for both lenders and investors. A team with the right skills, experience, and capabilities to effectively implement stated goals and objectives is what funding sources expect.
Your goal is to effectively communicate to your potential funding source your team’s high level of experience, skills, relationships, motivation and commitment.
Show your lender or investor that you are a low risk because you have the ability and drive to successfully implement your business plan.
What Makes You Different
Having a highly skilled management team can mean the difference between success and failure in obtaining financing to grow your business.
Whether you have an “A” team or are in the process of building one, you have to do more than just highlight them in your presentation to a financing source. You need to spell out in detail what each member achieved and how that will help with the growth of your company.
This is the place where you want to wow funding sources with the magic you bring to the table that will make them money.
In most presentations, I see uninspiring resumes of the management team. Instead of stating that you have 20 years of experience as a marketing executive with ABC Corp., provide the reader with a stimulating description of each member’s successes.
Your need to specify each team member’s experience in terms of revenue growth, increased profitability, and number of successful product or service launches completed for which the executive was responsible.
Excite the funding source about the caliber of your team. Highlight your team’s successes with inspiring language such as:
- Turned around an underperforming company by redesigning the business model and strategy. Grew revenue by 20% and profitability by 100% in 18 months.
- Founded innovative software company which grew to 200 clients and $1.5 million in sales within 3 years and was sold for $10 million.
- Delivered 180% sales increase after transforming company’s approach to retail promotions. Created 20 account-specific, co-marketing programs for major retailers.
- Replaced $1 million in lost revenue due to loss of major clients by revamping company’s eCommerce site. Within one year, increased online sales by 100% and cut marketing costs by 46% with new online strategies.
The goal here is to excite the funding source about the caliber of your team and to do that you need to highlight your successes in inspiring language.
Building an “A” Team
Whether you are approaching a lender or investor, every financing source want to see an “A” team – members that have extensive experience and a solid track record of success in helping companies grow.
Funders pay significant attention to the management section of your proposal. Lenders and investors will always look to the skills and experience of the management team as the essential key to the success of the business.
It is common to hear funding sources say that they make their decision more on the team than the business plan.
As was noted in a previous blog, Discord among Management Team Can Doom Financing, every lender and investor I spoke with noted the significance of the team:
- “We buy the people, not the project.”
- “If they are too difficult to deal with, we won’t consider them.”
- “If the management team hasn’t worked together long or if it looks like they don’t like each other, it raises big doubts.”
- “If they are arrogant, with very large egos, we won’t deal with them.”
Go Beyond the Management Team
Funding sources want to see that you have talent throughout the business to feel comfortable. They want to be sure that you, as the CEO, can focus on the critical issues of the company and you can rely on a strong team to manage the more day-to-day matters of the organization.
Most lenders and investors believe that without a team backing you up, you would be squandering your time and as a result you would be less productive resulting in a company that would be less profitable.
Identify strategies that show your company has the right people, with the right skills and capabilities at every level within the business. You can do this even if you are a sole or a micro-business, though this is easier if you are well-staffed.
Don’t forget to add any experts and consultants that you are working with—your CPA, IT specialists, marketing consultants, etc. (with their permission, of course!).
If you are seeking financing to augment the team with additional hires, it is absolutely worth stating so in your conversations with financing sources, as well as in your presentation detailing why you are seeking funding.
When presenting the skills of your team, concentrate on each team member’s skills and areas of expertise which offer the greatest contribution to the operation of the business.
Create detailed resumes to add to your funding proposal filled with success stories from their previous business experiences. For all the key managers in the company, specifically outline the role that they play in growing the business.
This information will provide financing sources with more confidence in your business and less risk to their investment in your company. This translates into winning financing to help you grow your business.
Diane Weklar, the Authority on Accelerating Business Growth, is the CEO of the Weklar Business Institute. She is the author of the award winning book, Mastering the Money Maze: 10 Secrets to Winning Business Financing,which is also an Amazon #1 Best Seller. This book provides practical insight to build a successful business and the practical steps to raise capital to help your firm grow. She can be reached at Diane@Weklar.com.