Listen, Listen and Listen More

Hi

On Tuesday I received a business plan for a startup entrepreneur with a fantastic product. I could see that this product had lots of potential. In was in the ‘green’ space and in demand.

He wanted me to help him raise the money.

The entrepreneur, Joe, wants to raise about $4.5 million to get moving. He had a plan, very detailed financials, brochures and product samples. Lots of work had been done and it was all very professional and well packaged. Created a powerful first impression. Lots of ticks for Joe - looking good.

My first reaction was to look at the financials. Here’s my reaction:

Argh, lots of very complicated spreadsheets that did not follow a standard set of accounts. So I had to work out what it all meant. That takes valuable time. But after a short time I could see revenue and profit forecasts. These were way too optimistic - generating 7 figures in the first 8 months. So now I’m a bit nervous.

I then look at the marketing plan to see how Joe planned to get sales. After reading the plan I had no idea. He had lots of comments about talking to major distributors but no detail - just motherhood stuff.

Then I decided to call Joe and give him feedback.

Before I tell you what happened think about what my situation - I’m very busy, minutes matter, it’s nearly Christmas, I’m giving free advice at this stage and I’ve already spent 20 minutes on the plan.

I called Joe. I mentioned to him that I had only a short time but was more than happy to give him feedback. I started with the financials. With every point I raised Joe went into an very detailed explanation of what he did and why he did it. I can understand that. Joe had spent a lot of time and had done a very detailed analysis of all the financial aspects.

What I was saying to Joe was that, at this stage, I didn’t need to know all that information. I just wanted to get the big picture - growth in sales, where he was selling, profit, ROI and cash flow. I had serious concerns about the optimistic projections and I wanted to understand how he was going to reach those targets. What marketing was he going to do?

But Joe was determined to make sure that I understood the detail. He didn’t understand that the more he talked the less feedback I was able to give him.

The best thing Joe could have done was to ask me questions about my review and to keep his responses really short. That way he could pick my brain, get lots of free advice and then decide what he’d do with that advice.

In the end I was only to pass on about half of what I wanted to before my next appointment arrived.

Unfortunately I could not pass on Joe’s plan to any investors because my concerns were not fully addressed. That was a pity because Joe has a great product and he also had put together a very professional plan and done lots of work on the financials.

It’s always a good idea to put yourself in the shoes of the prson you’re talking to - how busy are they, what concerns them, how do you get what you need from the conversation.

Have a great Christmas. I’ll be back blogging on 7 January 2008.

Cheers