Posts Tagged ‘emotional priorities’

It Is Really Not About You

Friday, November 10th, 2017

 

Why do so many seasoned, and less seasoned entrepreneurs seeking to attract new investment shoot themselves in the foot? They are rarely short of industry knowledge but they are woefully lacking the process skills and critical thinking to attract serious investors. Acquiring investment is about investors. An investor validating their own judgement, no one else’s.

Yet all I here at the outset, is how great the entrepreneur’s business skills and judgement are, wrapped up in their business model and growth plans.

When I push back and ask, “what” (strategy) have/are you doing to help your ideal investor validate their own skills and judgement after they are done with your investment? I am invariably met by a blank stare. That is compounded by my supplemental question, “how” (tactics) have/are you planning to help your ideal investor validate their own skills and judgement when they are done with your investment?

In the absence of a strategy and tactics for creating powerful, sustainable and profitable partnerships with  investors, an entrepreneur’s mission will never be met and manifest. Here is three powerful lessons from my most successful clients:

  1. Raising, deploying and realising capital is a “process”, not a small number of events. It has a “before” (trust, relationship building, conceptual agreement culminating in agreed terms), “during” (effective implementation, impressive value creation, robust risk mitigation) and “after” (planned disengagement, rapid realisation of committed capital plus impressive gains, efficient remittance of resources). Or to put it crudely, cash and resources “in”, cash and resources “out” / time period.
  2. Timing has a “hierarchy of priorities”. (1) the investor’s financial, intellectual, social and cultural needs (most only think about the first need and rarely consider how those are changing in the lifetime of the investment), (2) the availability of an appropriate exit to ensure the investor’s objectives are met and (3) the  future of the business.
  3. They think and act like a successful investor. An investor thinks with logic but acts on emotion, although in some cases the latter might be as heard to discern as Robert Shaw’s face in that infamous card game on the smoke-filled train carriage to Chicago, in my personal favourite, The Sting.

Uncovering The Investor’s Logic and Emotional Reasoning

  1. The reward logic behind the deal. How might it meet or exceed the investor’s need for capital preservation and capital gain, the return on the investor’s intellectual time invested, the social impact met and the cultural benefits accrued (for example, greater affinity with like-minded investors)?
  2. The risk logic behind the deal. What is the seriousness and probability of foreseen and unforeseen obstacles with the deal preventing the investor meeting or exceeding their desired outcomes? Then, what preventative and contingent actions can realistically be applied to arrive at the deal’s “ultimate net risk”?
  3. The sum of the above is the investor’s “great deal” logically. We are not finished yet!
  4. The emotional rewards behind the deal. How might the emotional imperatives of the investor (“reward”) be transformed (repute, peer recognition, trusting relationship with the General Partners and co-investors, promotion prospects, larger bonus and share of carried interest, ego, greater responsibilities, career development, future capital made available, new fund created, more impressive future dealflow presented and so on)?
  5. The emotional risks behind the deal. What is the seriousness and probability of foreseen and unforeseen obstacles with the deal preventing the investor meeting or exceeding those desired outcomes? Then, what preventative and contingent actions can realistically be applied to arrive at the deal’s “ultimate net risk”?
  6. The sum of the above is the investor’s “great deal” emotionally. That is what they are going to make their final decision based on. Are you investing sufficient time and energy in the right area? Are you thinking it through smartly? My guess is most entrepreneurs are spending 90% of their time on the logical reasoning and perhaps 10% on the emotional reasoning when it probably needs to be inverse. Why would you do that?

The smart readers will quickly grasp that a PowerPoint deck or teaser is largely worthless at addressing the latter. You need absolute credibility. You need to take time to build a peer-level trusting relationship. You need to ask powerful questions in a way that the investor is willing to reveal his or her priorities. The shorter the question, the more the investor will reveal. It crystallises it for them. “What are your hopes? Why? What are you fearful of? How did you get to your position?” Frame the question, listen and follow up in a smart way. You cannot coerce or motivate them.

Your job, as an entrepreneur, is to aggregate and connect the dots for the investor. To convert, the credibility and seductive rapport into committed capital with the use of powerful language and a compelling interface for the  investor.

After reading this you may very well panic and spot a yawning gap in your skills and techniques. That is OK, find an entrepreneur, who has done what you successfully seek to do and who can translate and transfer it to you.

A word of warning, a great many advisers don’t qualify, nor do a great many entrepreneurs, who are inept at the translation and transference. Hire qualified advice sparingly.

© James Berkeley 2017. All Rights Reserved.

 

15 Mega Relationship Questions For Every Situation

Friday, December 4th, 2015

Whether you are hiring a key person, seeking to be hired, wanting to develop a peer, subordinate, key client, business partner or investor relationship, here are 15 mega questions you must always have in the back of your head. You have my permission to copy and paste this list and use it as you wish with appropriate attribution to me.

The beauty of these questions is in the simplicity and their power. “Simplicity”, asking a short question results in people revealing more. It crystallizes it for them. “Power” in that emotion and passion are key to getting others to act. We want people to be alive and we want to tap into their deepest place so that they reveal themselves. You can’t demand people to reveal themselves, you have to ask it in a way so that they reveal themselves.

Mega Relationship Questions

  1. Tell me about your obsessions?
  2. Tell me what you are passionate about?
  3. Tell me about your earliest memories?
  4. Tell me about the defining moments in your life or career?
  5. Tell me about your proudest achievements?
  6. Tell me about your greatest disappointments?
  7. Tell me about your hopes?
  8. Tell me about your favourites?
  9. What are the fundamentals of your own success?
  10. Tell me about your secret talents?
  11. Tell me about your biggest conflicts?
  12. Tell me about your fears?
  13. What would be your final piece of advice?
  14. Tell me about your influences?
  15. What makes you tick?

The added advantage is that these three dimensional questions enable you to change the length, depth and breadth of any conversation with minimal effort.

© James Berkeley 2015. All Rights Reserved.

Small and Family Business 101

Tuesday, March 31st, 2015

There is a reason I largely choose not to immerse myself in helping investors, founders and top management in small and family businesses profitably grow – emotional overload. Here is three attributes (“The Three P’s”) that anyone who wants to build a career “selling” to these firms must excel at:

  1. Patience – a willingness to live with large levels of procrastination that has more to do with the Founder’s beliefs and their subordinates views on how best to conform to those beliefs. “We demand and believe in loyalty” – excessive numbers of mid and senior employees and clients who are retained by the business despite an increasing strategic “mismatch” with the future direction of the firm.
  2. Power – an ability to line up the powerful forces in support of your ideas, insights and growth strategy and use that power to mitigate or eliminate the forces pointing their guns at you. In Boardrooms of small businesses, the power is largely drawn from the emotional objectives of the Business Owner, key investors or close counselors (reputation, standing in the community or within the firm, personal friendships etc.)
  3. Perception – an ability to tap into the key influencers’ perception of how they want the firm and its’ people to be viewed by the outside world  (clients, business partners, suppliers, competitors, friends etc). Many a reason to invest in a profitable growth alternative has as much if not more to do with perception than reality (the owner of an insurance broker who builds a HNW private client business largely because he wants to be seen as a peer of other successful entrepreneurs and executives in his personal community).

© James Berkeley 2015. All Rights Reserved.