It's the possibility of having a dream come true that makes life interesting. -- Paulo Coelho, Alchemist.
The cheetah is a beautiful animal. It is the fastest land mammal and it can give any motor vehicle a run for its money with its capability of accelerating from zero to 100 km per hour in three seconds.
However, the cheetah's unique talents of speed and agility come at a cost. Its fast legs drain so much energy and oxygen that the cheetah cannot maintain its high speed chases for more than a minute.
To succeed in getting prey, skilled cheetahs stalk their prey to within 20 to 30 metres and then spring into chase. Their ability to accelerate rapidly and their extreme maneuverability enable them to catch most prey. Even so, cheetahs' hunting success rate is less than 50%.
Oftentimes a cheetah, even after managing to bring down prey, loses it to hyenas and vultures because it would be exhausted and out of breath, needing up to half an hour to recover. Life as a cheetah is tough. Only the exceptional hunters win in the brutal fight for survival in the jungle.
Business is just as tough as life in the jungle. It is dog eat dog out there. Not everyone succeeds in building a sustainable business. The success rate in business makes grim statistics. Just about one in 20 new businesses survive beyond 10 years.
That is the reason why financiers and banks have to carefully scrutinise every financing proposal, to ensure they only choose those business ideas that are most likely to succeed.
The rigorous screening process of financiers and investors lead some entrepreneurs, especially the younger ones, to think that these institutions do not want to help small businesses.
If you ask older and successful entrepreneurs, you will find out that they went through a great deal of struggle to get the funds they needed to start or grow their businesses.
Even billionaires like Virgin boss Richard Branson still talk about how they suffered many rejections by banks. In his book, Screw it, Let's do it, Richard explains how his own bank manager, whose bank he had done business with for years, refused to give him a loan for one of his projects. He moved from bank to bank until one eventually agreed to fund him.
If your proposal does not win with one bank or investor, do not give up. If the cheetah gives up after missing one prey, or even losing it to another predator after killing it, it will starve to death. Instead it recuperates, gets up and goes on to try again. Likewise, you have to keep on trying. Try different approaches. Try different sources of finance. Eventually you will succeed.
There is one thing that you have to realise. It is that your business plan alone is not enough. Investors and financiers look at other things besides just your bright business idea. First, they look at you. They will want to know if you are the right person to implement the business idea.
The person at the helm of any business is very important. When Microsoft announced in August that CEO Steve Ballmer was retiring, the company's share price soared by over 9%. The firm had struggled under Ballmer to adapt to life in the post personal computer era. Microsoft was forced to swallow a US$900 million write off when it failed to sell a significant amount of its new tablets. Windows 8 had similarly disappointed. Steve Ballmer was seen as failing to lead the company to the expected great heights.
In contrast to the Microsoft case, BlackBerry maker Research in Motion (RIM) of Canada saw its shares fall significantly in price when founders and joint CEOs announced their retirement at the end of 2011 to be replaced by the chief operating officer. The market did not have any confidence in the new leadership of the company.
You, as the owner and leader of your business, will influence how a financier sees your business idea. If they do not feel you are the right person to make it happen, they will not finance the business.
Your major task then is to argue your case. You must show how your skills, training and past experience are the right mix to make you the right person to lead your business. Highlight your past achievements that support your case.
I have just completed a new ebook discussing more factors that financiers and investors look at in order to support a business idea. It is entitled Five Tips to Make Your Business Plan Attract Funding and I have already sent it to people on my mailing list. You can send me an email request if you want a copy and you can also download it from my website. Let me know what you think after reading it.
Phillip Chichoni is a business development consultant who works with SMEs and entrepreneurs. You may contact him by email: firstname.lastname@example.org. You can also visit: http://smebusinesslink.com.