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Friday, July 3rd, 2015


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Six Biggest Entrepreneurial Mistakes

1) Depending on building a viable business through funding from an Angel or Venture Capitalist. Your chances are actually .5% to 4% depending on whom you talk to. It is rare that someone will come in and "save you." Learn to bootstrap your business the first year so you can get customers, revenue and prove your model. Establish a proven track record.

2) Projected revenues are based on market size. You need to show how you can build your revenues from the ground up with the appropriate sales and marketing strategy. To say that you will capture .5% of the market is not a good answer. Don’t compare yourself to other publicly traded companies in the market place. Remember, most of them have more capital than you ever will.

3) Competitive advantage based on "quality" of product or "first to market." You need to assume that someone can always build a better mousetrap than you. Don’t bank on the fact that you are the best game in town for a long-term competitive advantage…remember a thing called "reverse engineering"? All of the time…

4) Talking to any investor about your plan. Talk to only those who are truly interested and are able to fund your plan. Don’t over shop your plan. Don’t be afraid to ask for the order (will you invest in my business?).

5) Waiting until you are out of money until you start to raise capital. Remember that if you run out of cash, you are out of business. Many call this a "near death " experience. It is best to always have six months of working capital in the bank to cover any contingency. This will prevent you from having to negotiate investment terms when you are desperate and the investor feels "pushed" or has an extreme advantage. Remember how banks love to lend people money that do not need it? The risk is perceived to be lower.

6) Not focusing on the investors return. Be able to answer simple questions like: How much money is required to make a profit? What is my return on investment? What is the exit strategy? Be able to appreciate that the investor has alternative places to put his cash.

Editor’s Note: Lori King from Seraph Capital contributed to this article.

Barry Moltz is an award winning entrepreneur, author and national speaker. He co-founded Prairie Angels, a group of private investors committed to investing in and mentoring early stage companies and their entrepreneurs. His new book is titled "You Need to Be A Little Crazy: The Truth About Starting and Growing Your Business." For more information, please visit Moltz.com.

Copyright © 2005 Barry Moltz – All rights reserved.

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