In 2010 It’s Business as Unusual

To attract fickle investors entrepreneurs must think outside the ‘den’

By Leon Goren, CA

President, Presidents of Enterprising Organizations (PEO)

Chasing money is no longer the best way to preserve a business’ future. To stay in the game, business competitors must also stay ahead of the game — by making ideas their top priority. Innovation is as equally valuable as profits, and investors are interested in the best ideas.

Consider the CBC’s Dragon’s Den, where entrepreneurs are constantly trying to convince a panel of hypercritical venture capitalists to invest in their products/ideas. The major downfall for entrepreneurs pitching the Dragons is when they don’t fully understand the true innovation, and worth, of their product. For example, two entrepreneurs pitched a line of toques that were unique and creative, attracting impressive profits through local trade shows. They assumed profits would continue to rise – but the panel saw the idea as a fad. They didn’t convince the Dragons that the idea was strong enough to sustain the business. They focused on the profit potential not the attractive marketing concept.

Too many entrepreneurs focus on where the money will come from and not the idea—that is a major barrier to finding capital. This often is a paradox business leaders reveal in peer to peer meetings such as those at the Presidents of Enterprising Organizations (PEO); they want to be innovative and yet finding capital is a constant nagging presence. Innovation takes real discipline.

Staying Innovative

Attracting capital in today’s unpredictable economy isn’t easy and neither is developing new products; there is a constant influx of new competitive technologies, evolving modes of communication, and investors’ demand for transparency, information and answers. Even so, businesses must be constantly inventing and evolving as part of daily operations – that is their first priority. Profits should not be the hurdle; they simply reflect operational efficiency –and efficiency leads to growth.

Consider the explosive, global social media phenomenon. With Dell and Ford as benchmark users, Twitter and Facebook offer companies new and innovative interactions with consumers. However, according to a recent Econsultancy study, 40% of businesses who understand the benefits of using social media– say they just can’t find room in their budgets. This is non-productive thinking.

New ideas are how businesses thrive. The most enticing ideas are ones that intend to disrupt and improve; ideas that bring real change to our activities. Undoubtedly, Facebook and Twitter have changed the way the world does business. The Nielson Company study shows that year after year the average user has increased time spent on social media sites by a whopping 368%. More than anything else investors want to be inspired – an inspired investor opens his chequebook much more readily. Imagine the chequebooks opening for Twitter, which still has negligible revenue.

But great ideas aren’t enough; investors are also interested in the business leaders behind the proposal; they want entrepreneurs who are not only rich in modern intelligence, but who are passionately committed to move their ideas through the development life cycle. From Donald Trump to Kleiner Perkins, every venture capitalist says: “I want to see the passion. I want to see the commitment.” After the recession, most people want to feel like a new day is dawning – that there are forward-thinking leaders ready to take us into the future.

Revisiting the two successful toque entrepreneurs from Dragon’s Den, we can understand why investors are looking for a leader. Had they developed a real plan for sustainability of their product, a chance to implement innovation in the future, the panel may not have considered their product a “fad.” They didn’t pay attention to the primary leadership role: determining where the future will be and guiding the organization toward it.  Potential investors have an unerring sixth sense for locating leaders with a vision of the next five years in a business’s life.

Smaller businesses may never get over obsessing with the source of dollars. By constantly developing financing plans, innovation suffers and they never make it around the corner. The money is there — even if it doesn’t seem like it. It’s really true: obtaining capital should be the last obstacle on the course.  Top business competitors gain capital every single time through an innovative concept and an inspiring plan to develop it.

Part II: To attract investors, how do you execute?

In order to be constantly innovative, you need to stay in the know. Know your company, know your competitors and your goals, and know what’s new in business.

Search online. The Internet is undoubtedly the most recent, and most extensive resource in helping you find your answers. Look for what’s new in business and review case studies of companies that have tested new innovations. Do that constantly so you are not blindsided, especially in whatever Dragon’s Den you may be pitching.

Consider joining a network of business leaders like PEO. With a diverse range of industry leaders, PEO members are there to guide your ideas to success. They too are constantly searching for innovation – and have seen other innovators at work, knowing the obstacles others have overcome and how they’ve done it.

The business world is constantly changing, as we struggle to keep up, we must continue to look forward. This almost seems ironic, how can we look forward – when we are so far behind? It’s just 2010, business as unusual.