There is one thing that the Black Enterprise Entrepreneurs Conference + Expo will not be short on and that is potential business owners hoping to find capital to start or grow their business. Everybody thinks their business concept is great, but what does it really take to make an idea a good investment?
C. Alexander West, a senior business coach at the Kauffman Foundation’s Urban Entrepreneurs Partnership, says there are three things aspiring entrepreneurs need to keep in mind before they approach someone at a conference like this one – or just in general – about investing capital in their business.
Make sure you have fully developed and explored your concept and that it’s marketable. “You’ve got to have a sellable idea that is manifested in a business plan,” says West, a former management professor at Baruch College. “Your plan needs to articulate your concept by showing how the concept is going to be positioned in the minds of the customers, how you are going to generate profits and not revenue. People aren’t interested in revenue. They are interested in profits, because that is how they get paid.”
Invest some of your own money. “Many people come to the table expecting somebody else to finance their dream,” says West. “Since the debacle of 2008 and 2009, banks and lenders are a lot more rigorous about lending money.” West says the best way to show potential investors that you have faith in your business dream is to be financially invested yourself.
Don’t tell an investor your idea outright. Before you give anyone your idea, you should have them sign a non-disclosure agreement. “It is very dangerous to tell somebody your idea, because once you tell it, it is out there,” says West. “Some people are talkers and some people are doers. If you give a doer your idea, the next thing you know, they’re doing it. Especially if they have the resources.” Instead, West advises networking with them now and planning to contact them later. “Most investors have areas of interest and certain metrics they use to evaluate an idea,” says West. Learn what those metrics are, apply them to your business plan, then go back to them with your idea later.”
West was on the Get Money: Financing Your Business panel. Look for more articles titled “2010 Entrepreneurs Conference” and follow @BlackEnterprise on Twitter (#BEEC and #ECC.)
Marcia Wade Talbert is a writer and content producer for BlackEnterprise.com.