Hand Out or Hand Up

The opportunities for small business funding abound.  But like any other market, competition for funding is fierce and goes to the innovative, the viable, the visible, the capable, and the credible.  It doesn’t go to those with an “entitlement” mentality; it goes to those who are seeking a hand up, not a hand out – the companies that receive funds have the ability to generate something the funding market members want – either a technology to solve an existing problem, an innovation on existing technology or products, a reduction in costs, growth in the economy through job creation and tax base expansion, or return on investment – capital appreciation and profits.

Where does funding begin?  With a great idea…one for which there is a market capability and willingness to buy at a profit.  When does funding occur?  When you have a credible story about an entity that is capable of delivering on the promise of the technology.  How does your business get funded?  With visibility, an understanding of the funding process and what your audience needs to know and wants to hear, and with persistence – refining the message, honing the competitive tools, and developing a sound operating structure which focuses on both revenue AND costs.  It also requires an ability to identify and connect with potential investors.

Whether your funding source is from the private capital markets (angels and venture capital), from public markets (public stock markets and IPOs), or from government programs – SBIR, STTR, acquisition contracts, or other grants, funding isn’t a free ride or even a ticket to six-figure salaries and luxurious office spaces.  Funding is an investment in product development and the business operations needed to produce and deliver the goods to market.  It is not solely about the technology or the product.

Investors put their money on the line with people they believe in.  A strong leadership team and less innovative product will often win over a more innovative technology and an experienced business team.  What investors know is that betting on the more experienced, stronger business team, will more often than not, have better returns in a shorter amount of time.

There are numerous stories and profiles of the inexperienced entrepreneur with the innovative technology who achieves the megabucks and builds “the company.”  Those entrepreneurs are exceptional illustrations where business savvy, talent, innate skills, and a number of other factors combine – vision, persistence, discipline, timing, and more – to make a standout entrepreneurial icon.  These are the exceptions.  Arguably, these success stories don’t share all the nuts and bolts, day to day struggles, and how long “overnight” success took.  The sacrifices.  The late nights.  The team behind the team.  The dragons and the demons that plagued the adventure before the “happily ever after” was written.

Expecting someone else to do the hard work is not a perspective any entrepreneur can afford.  The investment of time, money, and emotion required can come only from the inside.  The organization must be committed to doing what it takes to build a business capable of delivering on the promise of the innovative product or technology.  The shortest route to achieving a successful company is having a sound business strategy, understanding your market’s needs, and working hard to get the right things done well.

Want to do business with someone?  Be able to tell them why you can help THEM.  Make sure you can deliver on your commitments.  Be prepared to deal with resistance to change, uncertainty in dealing with a new business, and the tendency to be willing to do nothing.

Need capital to grow your business?  Be good at business and your technology.  Know how you intend to make money, who and where your customers are, what they need.  Convey to potential investors that you will use their investment to get measurable, timely returns – you will make money for them.

Copyright ©2007 FOCUS Resource, Inc.

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