Speed, ownership and control key to outside funding
How far can so-called "bootstrapping" carry a startup or small business, and when does a small business owner know it's time to seek outside investment?
Obtaining outside funding generally comes down to three issues — speed, ownership and control. After “product-market fit” is established and you have paying customers, outside capital should be used to speed up customer traction. Outside capital almost always comes with strings attached. Outside investors will want ownership, a good return on capital and some say in key decisions. If you can live with the strings, take the money. Bootstrapping works, but it can take a long time.
What role do Angel investors play in supporting small businesses and just what is an Angel investor?
Angel investors are usually successful entrepreneurs or high net worth individuals who provide not only early capital, but they also can provide key contacts, expert advice, the most important things to focus upon and things to avoid. The right angel investors can greatly increase entrepreneur's odds of success.
How do peer-mentoring groups like Vistage help small business owners tackle tough issues like funding a business for growth?
The complexities of growth require a number of fast, accurate decisions. A strong group of peer advisers can help each other make better decisions, especially the ones that involve high complexity and
high risk. If you are growing rapidly, you don't have time to redo many of the key decisions. It's far better to get it right the first time.
Which issue is more challenging for a small business owner, accessing funding for growth or hiring employees who are the right fit?
Money chases great business ideas; not vice versa. You can eventually find the money if you are effectively executing on a great idea. Getting and keeping the right people in the right seat, top-to-bottom through the organization, is the larger challenge. You have to get very clear on who fits and why and what constitutes success in each position.
What do the small business owners you work with through Vistage tell you is their No. 1 challenge, and what advice do you give them to meet it?
Building and sustaining an effective culture is the hardest part of the job. A strong culture is the only sustainable advantage left today for business; everything else can be copied given enough time, money and people. Become a student of culture: read the best books, study the best companies and meet regularly with others who are focusing on building a great culture.