Investor Relations » Entrepreneur

Medical Angel Investors

Admin — Thu, 21 Jan 2010 14:42:30 +0000

As with any investor, it can be expected that an angel investor would only put his money into a business that would provide the least risk on his investment. This is reflected in the investment decisions that such an investor would make, especially in the types of products or services that a business provides. Usually, angel investors invest in businesses that have the potential for long-term profitability. In recent years, the preference of angel investors has been in medical devices and medical related services, including medical billing services.

As a result, entrepreneurs who opt to go into businesses that make medical devices and provide medical related services have found it a little bit easier to get the interest of angel investors. However, this does not mean that anyone who decides to go into these kinds of businesses would get an angel investor to invest just like that, as there are things that entrepreneurs need to do first before they can sign a deal with an angel investor.

What angel investors look for

Apart from a presenting a potentially profitable product or service, businessmen need to prepare a number of things and equip themselves with a number of skills that would increase their chances of landing a deal with an angel investor. Among these skills, one of the most important is competent management skills. In addition to this, an entrepreneur needs a good business plan, which identifies the size of the market, the competitive advantage of his business, and financial forecasts.

On the other hand, there are also a number of things that entrepreneurs should avoid when they are presenting their business concept to an angel investor. Some of these include and having unrealistic valuations for the purpose of making his business more attractive. This is because angel investors are very astute businessmen, and they can tell if you are trying to fool them. If they catch you doing it, you can kiss their investment goodbye.

Recently, angel investors have become very interested in the medical field, which has made it easier for entrepreneurs who are in the field to gain access to capital. However, even if an entrepreneur is in the right type of business, there are still a number of things that an entrepreneur needs to prepare and skills that he has to learn before he can land an investment deal with an angel investor.

4 Essential Questions to Ask Your Investors

Admin — Wed, 30 Dec 2009 06:18:49 +0000

There are two kinds of people in the world: Those who say they are going to do something and those who actually do it. You might find people who are interested in becoming multifamily apartment investors but once the proverbial rubber meets the road, they may be hesitant to part with their money. Or, they might hand over their investment with several demands and strong arm negotiation tactics. As a multifamily apartment entrepreneur, you need to not only find potential investors and convince them of your ability to generate a return on their investment, you need to be able to qualify them. Are they going to trust you or stand over you while you work? Are they going to work with you for a mutually profitable relationship or will they leave you in the dust? Here are four questions you need to ask all of your investors. Question 1: The Reason. Ask your investors, “Why do you want to invest?” They will never want to invest for the sake of investing. Instead, they will want to be able to pay their grandkids’ way through college or they will want to retire from their job in ten years. When you know why they want to invest, you’ll be able to structure the deal in a way that is attractive to them. Someone who wants to pay for their grandkid’s way through college in 2 years will have a different weighting of cash, equity, and risk than someone who wants to pay for their newborn grandkid’s college in 18 years from now. Someone who wants to retire from their job in ten years might want to put in some cash and receive equity that they will grow over time that they can cash out later. Knowing what motivates them will help you. Question 2: The payback. Ask your investors, “How do you want your money returned to you?” They might want monthly, they might want a lump sum, they might want equity, they might want all now, they might want some now and some later. It all depends. Knowing the answer to this question, and the answer to the first question, are going to improve how you structure your deals. If you find that your investors have been resisting multifamily apartment investing with you, start asking these questions. You will create goodwill by paying attention to them. And you will gain insight into what is important to them so you can present the multifamily apartment investment opportunity in a way that meets their needs. Question 3: Experience. Ask your investors, “Have you had any experience in real estate investing before?” and, “What was your return on those occasions?” This will help you to know what their expectations are going into the deal. As well, it hints at how enthusiastic or reluctant they will be at your opportunity. Other questions you’ll want to ask them related to investing experience are: “What was your overall experience?” “Were you a lender or equity provider?” And, “What is your desired return on investments and what are you currently earning?”Question 4: Money. Ask your investors, “How much are you looking to invest?” This straightforward question is a good question to ask because it helps to qualify your investors, separating the “sayers” from the “doers”. And you’ll want to know the source of that money because liquidity is important to you since you don’t want to wait for them to go through the long process of cashing out illiquid investments. The first time you invest with someone, they might not want to give you all of their potential investment capital, so they will test you with a small amount. So follow up the above question with another. If they give you $50,000 then ask them “if I have an opportunity for $250,000, should I call you about it?” If they answer with a yes, you know they are testing you; if they answer with a no then they’ve reached their investing limit. These four questions, and the related questions that go with them, will help you to create great working relationships with your investors.

HOW TO WRITE A GREAT BUSINESS PLAN

Admin — Wed, 23 Dec 2009 19:02:44 +0000

If you’re thinking about writing a business plan, you may be wondering where to start. If you bear in mind the following points, you’ll be far more likely to write a great one.

Business plans need to contain all the essential information relating to your business. Make sure you include what your business does, including its products or services, its customers, and the place it occupies within the market. You also need to have a clear understanding of your finances and how you’re going to make your business profitable.

Your business plan needs to have a clear strategy in place of how you’re going to realise your potential. It’s useless setting off into the unknown without some understanding of how you’re going to achieve success, so give yourself the best chance possible and include all the important points of how you’re going to get there.

If you’re planning on securing investment through business angels or venture capitalists, you’ll also have to tailor it to include the details they want to see.

One of the most important aspects they’ll be looking for is how much money you’re asking for, along with what you’re going to do with it and the level of ownership you’re willing to give in return. They want to know who else is involved in the business, how you’re going to make the business profitable, and most importantly, what exit strategy is in place for them to reap their return. This is, after all, what all investors are interested in, so make sure it’s clearly visible.

It’s essential that these points stand out in your plan. Potential investors aren’t going to waste time trying to wade through your proposal looking for answers, so make it succinct and to the point.

Planning is key to the success of any business. If you include all the above points when writing your business plan, you’ll be well on your way to achieving your potential.

By: Entrepreneur Investor Network

What Makes You Bankable to Investors

Admin — Sun, 20 Dec 2009 16:27:39 +0000

Hundreds of Billions of Private Equity dollars are trying to get off the sidelines and into the game. The single most important decision criterion is the quality of management. What makes an executive bankable to PE groups?
So much has already been said written about bankability that it’s difficult to sort through the noise. Here, are four key criteria that cover most of the ground. If you stand up to these four tests, chances are excellent that investors will get behind you.
Track Record of P&L Success
As one PE partner recently told an executive, “We want you to earn, not learn on our watch. ” Without a doubt, this is the single most important factor. Do you have a track record of earning money in the same or a related industry? Have you run businesses of a similar size?
Nothing is as impressive as consistent growth of both revenue and earnings. However, most sophisticated investors understand that stuff happens. Bumps in the road are not necessarily an issue. You should be prepared to talk about them openly and show how you overcame them.
One important note: the CEO title is not the key. Bottom line responsibility is everything. For example, the general manager of a $200MM division of a large corporation will usually be bankable to run a similarly sized company in the same industry. Whereas the CEO and owner of a $20MM company in the same industry may not be.
2. Leadership / People Skills
Are you a team builder? Have you demonstrated the talent to motivate and empower your subordinates? Do you have some key players who’ve worked with you before and would like to join you in a new venture?
Equally important, do the investors think that you’ll be easy to work with at the board level? Will you take the time to understand their perspective and listen to their ideas? It’s good for the entrepreneur to have a certain level of understanding of the business of operating a Private Equity fund. This will sensitize him/her to the partner’s needs.
3. Desire to Build
Investors are looking for executives who thrive on the process of building a business and are willing to stay with it until a successful exit is achieved. A window of 5-7 years is normal. They become wary if they think that you’re looking for a quick flip.
4. Skin in the Game
With very few exceptions, investors want the CEO to make a serious capital commitment to the venture. It is universally believed that this insures that your attention and motivation will remain focused. How much is serious? The answer varies but most PE firms would say that they know it when they see it. They don’t need you to take out a second mortgage but they do want to know that the investment will represent a significant portion of your liquid net worth. A range of $250K – $1MM covers most cases. It’s not uncommon for a PE group to offer to lend the executive money on attractive terms in order to increase the commitment.
And one More . . .
In many cases, the PE group identifies the opportunity and then searches out the executive. However, the best opportunities may be created by an executive who has located an opportunity and is seeking investors. In this case, the PE firm expects you to be able to explain and defend the investment thesis. This discussion will include market opportunity assessment, a plan for operating the business with appropriate financial projections and a discussion of potential exits.
If you’re Bankable, you’re Valuable
Executives who pass the bankability test are the rock stars of the Private Equity world. Understand your value and expect to be well compensated. However, don’t focus too much on salary. The most important way to become wealthy in running a PE backed company is through incentive equity. Negotiate hard for a lot of upside at the time of the exit. If a PE group is achieving their IRR target for the investment, it’s appropriate for upper management to share in the wealth in a big way. For example, if the PE fund can earn an IRR of 30% or more after granting management 15% of the equity, then everybody is a winner.

Using Public Relations to Market Your Business Startup

Admin — Sun, 01 Nov 2009 10:06:25 +0000

Marketing a startup is one of the biggest struggles for any entrepreneur. You need to increase sales and grow your customer base, but effective advertising is expensive. While the internet provides significant opportunities for low-cost and no-cost marketing, many business owners overlook the value in establishing an in-house public relations system.

What is Public Relations?

Public relations encompass the work that needs to be done to get your company in the news. The efforts should include building relationships with appropriate news editors, writing effective press releases, and planning how to best use press relations to enhance your marketing plan. Of course, it is possible to hire a PR firm to do this work for you, but they can be expensive and do not have the same stake in seeing your venture succeed as you do. In addition, a PR firm will have to be taught about your company — what you do, how you do it, what will be newsworthy, and who should be targeted. You will be charged for the hours it takes to get them up to speed. A better entrepreneurial option is to teach yourself all you can about effective public relations, then assign the tasks to your key employees as you grow.

Planning PR

The primary objective of public relations is to expose more potential customers to your company and product(s). You may have a secondary objective of exposing potential investors to your company, as well. Thus, your first step is to define what is and will be newsworthy about your business. Sending out sporadic press releases is far less effective than developing a steady stream of publicity. The editors who review hundreds of press releases per day are more likely to notice yours and hopefully become interested in your progress if they see your company name on a regular basis.

News events are fairly easy to come by with a startup. Consider planning press releases for:

- What your business will do

- Who will benefit from your product or service (consider seeking “testers”)

- Securing investors or financing

- Business launch or grand opening

- New product releases

- New contracts awarded (with your client’s permission, of course)

- Staff changes and additions

- Website content additions, especially freebies

- Events you sponsor or co-sponsor

Once your business is launched, every milestone that you noted in your business planning is an opportunity for a press release. Be creative and stay on top of the process. Interesting news is important, but consistency is critical.

Meet the Press

The best planned PR campaign is only as effective as who it reaches. Do your due diligence in finding the right news sources to reach your potential customers. Most newspapers and television stations have editors dedicated to business news. Find out who they are and make an effort to get to know them. Let them know that, as an expert in whatever it is you do, you are more than happy to provide information on your business, industry, target market, or whatever else they need. One great way to meet members of the press (local, anyway) is through networking events. If there is an important guest or popular speaker, chances are the beat reporter will be there. While everyone else is clamoring to make contact with the star, take that opportunity to get to know the reporter.

Building a good relationship with the right members of the press is invaluable. If they can count on you to provide informative and interesting quotes or sound bites, you will not only build your reputation as the expert in your field, but your company will garner free advertising every time you are used as a source.

Finding the right outlets, and knowing their editorial schedules, is critical. Don’t just randomly send out press releases, but do your homework so you know they are going to the right person at the right publication. Most magazines have a three-month advance requirement, meaning articles they write today will not be published for three months. Local newspapers and magazines tend to have much shorter news cycles. Keep this in mind when setting up your public relations marketing plan. Select the media outlets that are likely to meet your objectives. Whatever your target market reads, that’s where you want to be. Gather all the editorial information you can about these sources. Read the magazines (and subscribe), watch the TV shows. Pay attention to the details of how they present information. If a single, square, color photograph is standard with an article, be sure that is what you send. If articles are short, keep your press release short. Building these contacts takes time, but is well worth your effort. After a few distributions, you will establish a system for reaching your best opportunities and the time required will be significantly reduced.

Writing the Right Press Release

Press editors are flooded with press releases, often reviewing a hundred or more each day. The trick is to make your press releases stand out to the reviewer. Every news item you distribute should say “News Release” and your company name at the top. Avoid sending press releases on standard letterhead. The next line is your headline. Headlines can be the most difficult, yet most important line in the entire document. It needs to grab the editor’s attention and urge them to read on. Reporters and journalists are looking for news items that are important to their readers. Spend some time on the headlines, they are your first obstacle to getting free press.

The body of your press release contains two parts — the news item itself and a general company description. The news item should include complete answers to the classic questions — who, what, when, where, why, and how. Use an active voice — say what you do, not have done or will do. Include quotes from you or other key employees and be sure to make the information relevant and interesting to your target market.

The final paragraph of your press release should be “About the Company” — a good description of what your business does. Include media contact information at the end, with at least your name, title, telephone number, and email address so that the contact can reach you for more information. Excellent samples of press releases from within your industry can be found at PRWeb by searching your keywords.

Get Your Public Relations Started

Wherever you are in the startup process, get to work on developing your company’s public relations plan right away. Identify the media most relevant to you, and brainstorm newsworthy items that you plan to distribute. PR can be an effective marketing tool and it’s free. Don’t overlook the possibilities for your venture, get started today.

By: K. MacKillop