Is there a better place for small business owners to hear what investors want other than from a venture capitalist and former entrepreneur?
People don't just hand money out, they need a compelling reason to fund your business. A solid financial plan, creative concepts or the satisfaction of gaps in the market are all things that they may look for in a company.
Heidi Roizen and Barbara Corcoran, both former entrepreneurs and current investors, shared what they look for in a small business. Roizen, who relayed her advice to Extreme Networks' chief marketing officer Vala Afshar for an article in the Huffington Post, was born and raised in Silicon Valley, and started her first company immediately after finishing Stanford business school. She sold her business after 14 years and eventually found a new profession as a venture capitalist following a stint with Apple. She now works on the back end of investing, reviewing entrepreneurs and providing advice on deals. Corcoran, on the other hand, is on the front lines as an investor featured on the ABC television show "Shark Tank." She earned her business chops running New York real estate brokerage Corcoran Group. In August she spoke with The Associated Press about her experiences at Corcoran Group and the entrepreneurs on Shark Tank. Read below to hear what they had to say:
Roizen
According to Roizen, it is vital to be passionate about what you're doing. The life of an entrepreneur consists of long hours and hard work – it is not for everyone. It takes a person with a passion for that kind of dedication and the service he or she intends to provide. Part of diving into a small business venture is understanding that failure is a very real possibility, even with sweat your pour into your project day and night. In fact, most entrepreneur success stories were proceeded by lessons learned from failure.
As you're working your hardest to get your small business off the ground, remember to engage with venture capitalists, Roizen suggested. She is a firm believer in the importance of relationships, and urged owners to think of their investors as people, not banks. Venture capitalists often want to help build the small business and guide it toward success. Take advantage of their desire to be involved – look for feedback. Often times even if an investor ultimately plans on turning an entrepreneur down, there is a good chance he or she will still be willing to provide useful advice.
Corcoran
Corcoran told The AP that though small businesses don't have a financial advantage over large corporations, they do have a different crucial asset – creativity. While large companies have to research their ideas, and revise them thoroughly through long processes, entrepreneurs can simply dive into a concept and see if it works. Be aggressive when it comes to an idea or product. She spoke about Cousins Maine Lobster, a food truck company owned by two individuals. She called them "winners in every way building their business." They had one truck, and wanted to purchase a second though they were short on cash. Their business acumen helped them find that funding, and now the enterprise consists of 15 trucks.
She also warned small business owners not to grow arrogant in the face of huge offers. Because of her time on "Shark Tank" she has seen many entrepreneurs find unexpected success. If you find yourself in this position, don't let it get to your head. She ended the interview with The AP by comparing starting a small business with a relationship. You may fall for the perfect person, but the difficult part will be marriage. It takes hard work and not giving up – even when staring down failure.