If you're an entrepreneur who's willing to listen to business ideas, people ask you out for coffee a lot. They figure it's the polite way of not taking up too much of your time-a meeting on neutral ground over a coffee can be as short as 15 minutes. Or it can stretch out for an hour or more. It all depends.
The people who ask me out for coffee usually want help on the funding side of their business - meaning me providing funding to them.
Let me speak for many others in my shoes: You have about a 1-per-cent chance of getting my money. That means you may have to pitch your idea to hundreds of people to have a real shot at raising any dough. Why is listening to business ideas a somewhat cranky subject? Mostly because the entrepreneurs and venture capitalists who do this for a living fail a lot. I've personally funded a lot more duds than successes, although my success rate is climbing as I age.
In my genuine attempts to help people, I have to be frank, and sometimes brutally honest. That can come across as mean, but there's a method to my meanness. I have a photocopy of a sheet titled "77 Questions Every Business Plan Should Answer." I don't remember who gave it to me, or who to credit, but there are a lot of variations of it online.
I give the sheet to every budding, uninformed optimist who tells me they want to do the marathon run from idea-on-a-napkin to multimillionaire. It's a pretty sobering document.
Question 1 is meant to be a quick killer: "Why will this business succeed?"
If you can't answer that, then your hope of getting anyone other than mom and pop to throw you a financial bone is pretty slim. You say you have a unique idea? I doubt it. The only unique ideas I've heard pitched were complete eye-rollers - as in, "You have to be kidding." One guy who came to see me during the Internet boom wanted to start a website that would help tenants trade their way out of building leases online. Could he have found anything more likely to fail?
Question 8: Does the product or service meet a need or a perceived need of the customer? Don't tell me people are hungry and will eat in your new restaurant. It will have to provide more than food. It's also about the experience, the price and the location. You have a plan for those three, too?
People looking for money also have the annoying habit of assuming that an investor with a lot of dough will throw little bits of it - say, $5,000 or $10,000 - at just about anything. Forget it. Managing a few big investments is way better bang for buck than funding a lot of small ones.
Question 40: Why will your business succeed when it must compete with larger companies? Another "Hunh?" for most start-ups. Any business that takes off grabs the attention of established players and other new ventures.
Ergo, Question 42: If you plan to take market share, how will you do it?
Question 60: What business experience does the management team have? No experience, no money - not even a hope.
And the clincher is Question 76: How will investors get their money out? We want our money back, you know, to invest in the next great thing. If you can't tell me how and when I'll get it out, then it's not going in.
So, here's some advice based on those cranky questions: Write a really good business plan. You can buy templates. I use one I modified from Planigent (planigent.com). It costs about $30, and includes spreadsheets for modelling cash flows, and PowerPoint for creating presentations to wow prospective investors. Don't call anybody until you've finished the first point.
Investors will help you if you honestly seek their advice. That means listening to them and acting on their suggestions and warnings.
If you have a good idea, handle every objection to your business plan with facts, not opinions.
Don't give up. As in golf, if you don't get the ball to the cup, it won't go in.
Special to The Globe and Mail
Doug Steiner has a real job in the financial services business in Toronto.