This is a story about a social entrepreneur, born in 1843, who was to have a profound effect upon the lives of millions of people. His name was Russel H Conwell. He became a lawyer, then a newspaper editor and finally, a clergyman. It was during his church career that an incident occurred which was to change his life and the lives of countless others.

One day a group of young people came to Dr. Conwell and asked him if he’d be willing to instruct them in college courses. They all wanted a college education but lacked the money to pay for it. He told them to let him think about it and comeback in a few days. After they left, an idea began to form in Dr. Conwells’ mind.  He asked himself, “why couldn’t there be a fine college for poor but deserving young people?”, and before very long, the idea consumed him. “Why not indeed?” It was a project of total dedication – complete commitment. And almost single-handedly Dr. Conwell raised several million dollars with which he founded TEMPLE UNIVERSITY which today, is one of the USA’s leading schools.

He raised the money by giving more than 6,000 lectures all over the country. And in each one of them he told a story called, “ACRES OF DIAMONDS”. It was a true story, which affected him very deeply, and it had the same affect on his audiences. The money he needed to build the colleges came pouring in. The story was the account of a farmer who heard tales about other farmers who made millions by discovering diamond mines. These tales so excited the farmer that he could hardly wait to sell his farm and go prospecting for diamonds himself. So he sold his farm and spent the rest of his life wandering the continent searching unsuccessfully for the gleaming gems which brought such high princes on the markets of the world. Finally, the story goes, worn-out and in affinitive despondency he threw himself into a river and drowned.

Meanwhile, the man who had bought his farm happened to be crossing the small stream on his property when suddenly, there was a bright flash of blue and red light from the stream creek bottom. He bent down, picked up the stone, it was a good size stone& admiring it, later put it on his fireplace mantle as an interesting curiosity. Several weeks later a visitor picked-up the stone, looked closely at it, hefted it in his hand and nearly fainted. He asked the farmer if he knew what he had found. Why the farmer said no, that he thought it was a piece of crystal. The visitor told him that he had found one of the largest diamonds ever discovered. Well, the farmer had trouble believing that. He told the man that the creek was full of such stones not as large perhaps as the one on the mantle but well they were sprinkled generously throughout the creek bottom. Needless to say, the farm the first farmer had sold, so that he might find a diamond mine, turned out to be the most productive mine on the entire African Continent. The first farmer had owned, free and clear, acres of diamonds but had sold them for practically nothing in order to look for them elsewhere. The moral is clear, if the first farmer had only taken the time to study and prepare himself, to learn what diamonds looked like in their rough state and to thoroughly explore the property he had, before looking elsewhere, all of his wildest dreams, would have come true.

Now the thing about this story that so profoundly affected Dr. Conwell and subsequently millions of others, was the “idea” that each of us is at this moment, standing in the middle of his or her own acre of diamonds. If we’ll only have the wisdom, and patience, to intelligently and effectively explore, the work in which we are now engaged, to explore ourselves, we’ll usually find the riches we seek. Whether they be financial or intangible or both. Before we go running off to what we think are greener pastures let’s make sure that our own isn’t just as green but perhaps even greener. It’s been said that if the another pasture appears to be greener than ours, it’s quite possible that it’s getting better care…

You can download an RTF copy here Acres of Diamonds rtf

Download a PDF copy here Acres of Diamonds

Nearly everyone with the slightest interest in going into business knows that they need a well-written, well researched, well considered, business plan. But there is this one pesky section that some entrepreneurs and new business owners often do not give enough importance to: the financial forecast. Your business plan is that all-important document which acts as a roadmap for the future of your venture and is the first thing a bank or a potential investor will request when contemplating investing in your endeavour. It naturally follows that your potential lenders or investors – who are debating whether or not your company is seaworthy enough to put their money on the line with – will be rather interested in your company’s financial forecast and plans for the future.

That being said, there is often plenty of speculation on the part of the entrepreneur about the worth of including a financial forecast in their business plan. This scepticism generally stems from the question of accuracy, or to be more precise the question of how accurate the financial forecasts of a new venture could possibly be and whether or not these semi-guessed estimations are truly relevant and worth the effort.

It must also be said that the confusion about the importance of financial forecasts is not always solely due to conjecture about its worth; those who are not necessarily financially-minded may simply be confounded by how and why to include something that some might deem to be little more than guesswork.

However, while the numbers in your business plan may be estimated and assumed, they certainly are not simply guessed at or made up. They need to be well considered, researched and justifiable so that they will stand up to any reasonable scrutiny. And, if it just so happens that your current forecast really is comprised of a bunch of made up numbers, you might want to rectify this before submitting your plan to potential funding sources.

Keep in mind that your potential investors will use your business plan as their primary tool in weighing up the risk of investing in your company. You want to ensure that you look good on paper, but you also want to make sure that your figures are as accurate as possible. Now, when it comes to a financial forecast accuracy is decidedly relative, but you absolutely must be able to support your estimations, and your numbers must be able to stand up to questioning. When you accomplish this, you will be in a solid position to win confidence, win finance and start down the road to success.

The financial projections in this section should include a profit and loss forecast, cash flow statements and a sales forecast. Investors know that many entrepreneurs and new business owners will overestimate their sales potential which is why they often ask numerous searching questions to establish the validity of the figures – they will then take these answers into account when reviewing a business plan.

Now, while optimism is clearly one of the things that have gotten you where you are today, your potential funders will need to see that you also have a realistic streak. A good rule of thumb is to include three sets of figures within the forecast in your business plan. The first showing an optimistic view of your sales, the second a realistic view and the third a slightly more pessimistic view. This kind of honesty and acknowledgement of real life potential issues can go a long way to winning the trust of your potential investors.

Most importantly, you need a business plan that has an accurately estimated financial forecast where every figure is qualified, that you fully understand and that can be shown to potential funders. Whether you are presenting your investment opportunity face to face with your bank manager or in a pitch to potential investors, they will always have to answer questions about your expected turnover and profits. All too often entrepreneurs flounder over the difference between net and gross, turnover and profit, or simply knowing their figures. Excuses like, “I didn’t prepare this, my accountant did” or, “I’m an ideas person not a finance guru,” will not cut it in these meetings where they expect any entrepreneur to be able to multi-task at least to the extent of understanding and being able to justify the figures in their business plan.

If you have been on the fence about whether or not to include a financial forecast in your business plan, it’s time to climb on down to the side that knows just how important these documents really are. Besides, this side of the fence is where all of your potential investors are standing and, if they are considering investing in your company, they will be delighted that you have decided to join the party.

This article was first published on 1 July, 2010 under the title, ‘Show Me The Money’.  http://blog.angelsden.co.uk/index.php/2010/07/show-me-the-money/

Angel Investment Business Seminar in Qatar

So you have got a great idea and want to make a successful business of it?

You may feel that your product or idea will be sufficient in obtaining Angel Investment, however, the reality can be somewhat different.

Seeking funding for a new business venture can be a difficult and time-consuming process. However, there are a few tips that may help to make the process easier and more productive.

The Business Plan

Firstly, and most importantly, you need to have a well thought out and thorough business plan. As the first source of information for potential funding, the business plan is crucial in getting initial attention and interest from the Angel Investors. It needs to clearly reflect your vision and goals for the business, how the money invested is going to be spent, as well as how it will benefit the business and its potential funding providers. This gives you the opportunity to highlight your management ability and financial forecasts.

The Pitch

The pitch is also extremely important as it can make or break your chances of receiving funding – remember first impressions do count. Practicing the pitch is essential as you need to be prepared to answer the possible concerns investors may have, whilst providing a concise and engaging summary that doesn’t give away all ideas. It also needs to steer away from all jargon. Stick to what you know!

Even though Dragon’s Den may be a fabricated event created for a television audience, and more about entertainment than the true process of Angel Investment, there is a degree of similarity. Professional Angel Investors who are active with Angels Den tend to more laid-back so don’t expect such a grilling. Also don’t forget there won’t be a TV crew there whilst you’re pitching for Angel Investment.

Be Yourself

Angel Investors want you to be yourself. Whilst they know you are passionate about your business, it is more important that you are rational and realistic with your company’s financial and sales forecasts. No one wants to work with someone who isn’t grounded.

It’s All About The Detail

You need to be able to professionally present credible and detailed information relating to the current and potential capital, financial forecast, cash flow forecast, as well as how investments will be managed and what involvement there will be. Investors will want to know what sales you have already made so they can interpret the business’ potential.

How Much Of The Business Are You Offering?

Not only do you have to be realistic in terms of your financial forecasts, but also in what percentage of the share capital you are offering for your desired investment sum.

If you are offering 30% for £100,000,  is your business really worth £333,333? Can you back it up with figures?

What Purpose Are You Seeking Angel Investment?

It is also crucial that you know exactly what you want the funding is going towards and why your business needs funding? Are you using Angels to gain greater coverage in terms of their contacts and networking or maybe for their expertise in the field you are entering in to? Investors prefer to know up-front why you have chosen them and let’s face it, they don’t want to hear it’s just to use them for their money!

Are You Prepared To Be More Indebted?

You will need to be up-front regarding the company’s financial status and what levels of debt you have tied-in to the organisation.

Releasing Some Control

Are you actually prepared to have others having a say in how the business is run? Angel Investors tend to have decades of experience in business, and with their own money often being invested, would you be willing to work with an Angel Investor who has a degree of say of how the business in run?

Is Your Idea Original?

Another major factor that you need to take into account is that whether the design of your product or idea is original, has patents and importantly that you own the original design?

Angels prefer to protect their investments. Having a patent can make or break a deal. If patents aren’t present there is often no reason why other companies can not take your business idea and produce the product themselves. This would reduce the value of the Angel’s investment.

Be Aware Of Your Competition

Are you realistic about your competition? You would need to consider how they will react when you launch and market your products. Will they try and keep you out of the industry by lowering their prices, will they increase their marketing spend, or will they launch new products? The market won’t be static in the face of you entering it.

Are Angel Investors The Last Option?

Potential investors will also want to know whether you have approached any other type of funding before them and why you have chosen this method, particularly if you think your idea is so groundbreaking. They need to know why the venture is appropriate for the type of external investment they are involved with.

Angels will also wish to know if you or your family can’t provide the funds yourselves.

There Is No “I” In Team

Angel Investors also like to see that you have a team behind you that are committed and determined to make your business a success. Angels not only invest in the idea, but also the people.

If you have found the information useful then you can register as an entrepreneur here.

This article was first published on 26 August, 2008.  http://blog.angelsden.co.uk/index.php/2008/08/twelve-things-to-think-about-before-seeking-new-business-funding/

How to make the right connection in Qatar

Pitching for Angel finance rule #1—Be yourself
When pursuing Angel finance, be yourself. Don’t try too hard—the prospective investor is likely to see right through you. Remember, these wealthy individuals got to where they are today because they’re savvy entrepreneurs used to sifting out the truth. They won’t be impressed if they discover that you’re putting on an act to impress them—and they will be able to tell. Besides, nobody likes a kiss-up.

It’s only natural to want to do well in what could possibly be the most important meeting of your business life, but presenting a persona invented for your Angel finance pitch in the belief that it will show an investor what they want is a bad strategy. So if you’re not funny, don’t try to crack jokes when pitching for Angel finance—and if you’re not naturally sombre, don’t try to button it down. Start simply by being yourself. If you come across as unnatural or uncomfortable because you’re trying too hard to impress the investor, he or she will pick this up and feel less inclined to invest in you.

Pitching for Angel finance rule #2—Keep it short and professional
At an Angels Den SpeedFunding event, you will have just three minutes in which to present your case for Angel funding to each investor. Remember, these are wealthy individuals and you’re not the only one clamouring for their support. So while you need to be yourself, you also need to make your pitch professional—complete with all of the relevant information about your business, and its facts and figures. In short: you should know your stuff.

Think about an excited new mum or dad: they can answer any question about their baby. They know how much she weighs, what time she was born, what birthmarks she has, and where. Your business is your baby—and you ought to be prepared to answer any question that the investor might have, with the information right at your fingertips.

Make a list ahead of time of the questions that you might be asked during your pitch for Angel finance and make sure that you have those answers uppermost in your mind. If you have to dig for the answers (‘Um… Good question… Let me see here… I know I have it somewhere…’), you’ll end up wasting time and looking unprofessional.

Pitching for Angel finance rule #3—Honesty is the best policy
While you must be honest in being yourself, you must also be honest in relation to your business. If you try to inflate the facts and figures, once again, your potential investor will find you out. He or she may discover your omission or exaggeration long after your pitch—but whenever they do so, their trust and confidence in you will be destroyed. So when you make that graph, or when you write up that product comparison, stifle the urge to manipulate the truth. Of course, you love your business or your business idea. Of course, you think it’s a great idea—it’s your own idea, after all. But just because you think it’s great doesn’t mean that you need to come off sounding like a cheap used car salesman.

If your potential investor smells something fishy—such as a prospective sales figure for the first year that sounds a little too optimistic, or an assertion that you’ll definitely crush the existing competition without so much as a whimper from them—your pitch will be over before it really gets started.

So good luck with your Angel finance pitch: remember to be honest, professional, and—most importantly—be yourself, and it’s sure to go well.

Entrepreneuers learning about angel investment in Qatar

The business finance sector has changed beyond all recognition in recent years. Before the introduction of private investor funding, the options available to most small businesses would have been to follow the traditional beg, borrow or steal routes. They could beg their friendly (hmm) local bank manager for a loan, borrow from family or allow a faceless venture capitalist firm to “steal” a very high percentage of their business.

Private investor funding has simplified the process of attaining additional business finance and made it far more accessible to small and fledgling businesses than ever before. Business angels (the gentlemen and ladies with the cash to splash) could literally be anyone, from a successful corporate CEO to an everyday person with a little extra cash and an adventurous spirit. While pitching for corporate finance to a panel of business angels may be far more relaxed than a meeting with your bank manager, it is no less important to plan and execute your pitch in a professional and informed fashion.

To these ends we thought we’d give you a few pointers on what those offering private investor funding will be looking for when they consider risking their hard-earned money with your venture.

Differentiation
A pitch for private investor funding must convey the uniqueness of the opportunity you are offering the business angels in front of you. By the end of your 3 or 4 minutes, you must have convinced them that there is something special about your business, something that differentiates it, if only marginally, from what exists in the market today.

Passion
How passionate are you about your business? Make your zeal for your venture irresistibly contagious and you’ll stand a far batter chance of winning over your business angel audience. If you believe in your product or service, are committed to its success and convey this in your pitch, you are one step closer to your private investor funding.

Sacrifice
Closely aligned to passion are the sacrifices that you have made for your business. How much time and effort have you committed to your venture? How much have you personally invested in getting the business to where it is today? Business angels are looking for individuals who are 100% committed to their business, so present your sacrifices with pride and you’ll be sure to gain their respect.

Expertise
The relevance of your background will play its part in determining whether a business angel decides to invest in your venture. What skills do you have? Where did you previously work? Have you ever run a business before? Now that you’ve already proven your business has merit and you have the gusto to run with it, they will be looking for whether you personally have the ability to launch, develop and grow a business.

Market
Private investor funding is not a bottomless pit of generosity. Some markets are so swamped with competitors that to make any impression you would need to inject vast sums of money into a small business. Equally some ideas are just too far ahead of their time, arriving before their market has matured, and this scenario would also require a business angel to commit more funds than they would wish to. It is important that you know your market and appreciate how it will change over time and with different economic conditions.

Competitors
Are there other firms developing the same idea? How flooded is the market currently? What barriers are there to entry into your market? Business angels are interested in protecting their investments so you should aim to prove that your business model is strong enough to fend off competition and that you have the relevant patents or legal protections to ensure that you will have no direct competitors.

Profit
Ah, finally we come to the main business angel motivator, the reason why private investor funding has been so successful – the desire for profit. It does not matter how innovative your idea is: some are just not destined to make money. You MUST know your figures – what is your turnover and profit? – know your projections for the next couple of years, the cash you have in the bank and what you spend your money on. Business angels are looking to see a return on their investment, and need to be sure that you have a cast iron grip on the finances of the business and know exactly how you are going to turn their funding into profits.

Private investor funding is now available to ANY business or entrepreneur looking to launch a new ventureor any business looking for an investor. So if you would like to find out a little more about pitching to our business angels for funding to launch, develop or boost your business then come to our website at www.angelsden.com

This article was posted on 2nd March 2009.  http://blog.angelsden.co.uk/index.php/2009/03/how-to-secure-private-investor-funding/

The executive summary is the most important section of your business plan. It is normally the first section of your business plan that investors will read, and could be the last if it is badly written. An executive summary should describe the company, the product or service, and the unique opportunity your company is offering. It should also provide a short description of your management team and a summary of the investment you are seeking. Don’t forget to tell the reader why you need the money and how and when they can expect to be paid back!
It creates a first impression (remember what your Mum said about first impressions!) in the Angel’s mind of both you and your business. Use clear and concise language and words that command attention, and excite your Angel.

Be honest. It is often tempting to exaggerate or Gild the Lily, but you WILL get found out eventually and Angels will not be happy. Angels like the truth. Your summary should promote trust and if “just one little white lie” creeps out, Angels start to look for the others. Now you are on the back-foot.

The executive summary is neither an introduction nor an abstract; it IS the business plan in miniature. It should stand alone and be interesting, concise and clear. It should take no more than 5 minutes to read and when finished the Angel should be able to say “So that’s what these people are up to”

Here are several common mistakes that can make your executive summary less effective:

• Too wordy, and failing to get to the point. Angels are busy.
• Trying to be all inclusive (it should be a summary)
• Failing to show a unique or exciting opportunity
• Failing to summarise the investment sought
• Failing to generate interest in the reader

Some suggestions to combat these problems:

• Limit your executive summary to a maximum of 3 pages; 1-2 pages would be best
• Focus on the opportunity and explain why it is special
• Make certain that the opinions and claims in your executive summary are fully backed up by the other sections of your business plan
• Use only concrete facts and figures that explain your business concept, market niche and financial projections
• Don’t forget to include the details of your investment (the amount you need, what you will spend it on, and the return you offer your Angel)
• Keep the Angel in mind – why are they reading the plan and what response are you hoping to generate?

A good executive summary should demonstrate:

• A business opportunity that makes sense
• A clear plan for success
• A capable management team
• A clear, specific, and definable market
• Significant competitive advantages
• A solid and believable summary of the financial projections
• An excellent chance for Angels to receive a healthy return

The outline of your executive summary will vary based upon your particular business. But regardless of the format, every executive summary should include the following areas

The Opportunity
It should immediately grab the attention of your Angel. This is often best achieved by explaining why your business is different or unique. Clarify your business advantages, how you can break into your market first, the benefit of your proprietary product, or how research supports a significant customer demand for your product or service. Essentially, what differences or characteristics will lead to success?

The Product or Service Description
Describe your product or service in terms of its benefit to your potential customers. How does it work? What is it used for? Where is it sold? How much does it cost? How does the customer benefit? Remember to limit yourself to highlights in this section. Be brief.

The Market
Who is your customer? How large is your market? Who are the competitors? Why are you better? What are your market share projections? Your reader must be convinced that potential customers will have the want, need, and ability to purchase your product. Don’t try to avoid the fact that you have competitors. Instead, explain how you can gain market share with your business advantages.

The Management Team
Describe the management and how they will lead to your success. Is it clear your team is well-rounded with the experience, expertise and capabilities to achieve the goals outlined in your business plan? Does your board of directors or advisors bring credibility and experience to the table? Be warned – management weaknesses will ensure that Angels will go no further.

The Finance Requirements
How much money has been invested to date? What are your earning projections for the next three years? What amounts are currently required? What will the funds be used for? From whom do you expect to receive your investment? What specific return do you offer an investor? What is the exit strategy, in terms of both time and return?

At what point in the writing process is it best to write your executive summary? There are three schools of thought. The first says prepare it before you write the rest of the business plan. The second says write it before, then again afterward to combine the best of both. The third says prepare the executive summary only after the rest of the plan is complete.

Which approach is correct? It’s really a personal decision, but it has been our experience that preparing the executive summary when the rest of the business plan is complete is fairly effective. This allows us to summarize the plan after all the information has been laid on the table with the hindsight of compiling the entire plan.

Remember to review your executive summary many times and ask yourself whether it grabs the reader’s attention. Will they be excited about your business? Will they want to read the rest of the business plan? If the answers to these questions are no, rewrite it. Show it to a friend or business associate and ask them to be critical. Many times after someone reads your executive summary they will say “It’s great, but what about…?”

If you find yourself explaining important information to someone after they have read your executive summary, then it is likely that that information should be included in the document.

This article was first posted on 13 March, 2008.  http://blog.angelsden.co.uk/index.php/2008/03/how-to-write-an-executive-summary/