Build a profitable business- the baby steps part 46

We have been entrepreneurs long enough to know the games people play. There are several types of games. Also, there are several types of players, each with their own set of incentives, skills and visions. One of those situations where those players tend to start playing complicated games is when a company is about to change hands, or when an investment into a company is about to be made. When investors are discussing an investment with entrepreneurs, things could get ugly. After all a product of a life-time of work and sweat is on the line, and some major cash is about to change hands. The stakes are simply too high to be laid back about it. Some major decisions are to be made, and more often than not, those decisions will ruin your sleep for a while. Regradless of what you decide.

The entrepreneurs are a bit suspicious and over-protective. Who wouldn´t be? Somebody is making a run at their baby. The investors are cautious too. They probably know from experience that all that glitter isn´t gold. It could turn out to be lead- with a hefty price tag attached to it. Over the years we have been on both sides of that table. We have been the entrepreneurs with a company, when a sudden offer from a motivated investor landed in our laps. And we have been the investors, where we have sliced and diced the numbers, the entrepreneurs and the business of a company, in order to be able to make an offer for a piece of the action. We´ve been around long enough to know that most of what is on those lists below gives a fairly accurate picture of what to expect. We´ve heard most of these lies on many occassions. In fact, we think we may be guilty of delivering some of those lines ourselves over the years. We know they will be part of the entrepreneur-investor vocabulary for years to come. So maybe we overdid them a bit sometimes. We just couldn´t resist the temptation. After all, when you have learned to know the game, the players and the playground good enough you can´t help but to laugh at it all.  Sometimes a joke can point the way to the truth. This is exactly one of those times. Here goes; two lists of the most common lies that investors and entrepreneurs make when the going gets tough, and the lawyers get going.

Top 10 most common lies of entrepreneurs:

1. We don´t care about our salaries at all, in fact we don´t care about money. We just want this company to grow 100 percent per year and for you to get a good return on your investment.
2. If we can only achieve our target 2 percent market share, we will make gazzillions of dollars.
3. We are about to strike a deal (about selling our service/product) with one of the major players in our field.
4. We have been approached by other investors, and they are about to offer us a mouthwatering deal.
5. We are sitting on a gold mine of other potential blockbuster ideas that any astute buyer will get in addition to our existing business.
6. We have been very conservative in our projections. We expect the actual outcome to be much better than this.
7. We expect to grow exponentially for the next couple of years. Our pipeline looks very promising and we expect to beat previous years by miles.
8. Our patents are 100 percent bullet proof. There is no way around it.
9. We are very experienced at running a business and building a successful enterprise.
10. Our product/service is quite unique and is not easily imitated by major corporations.

 

Top 10 most common lies of investors/venture capitalists:

1. If it were only up to me I would definitely have invested in your company.
2. We will dedicate tons of resources and time to your enterprise once we sign the deal.
3. This contract is standard, they all look like this. In fact we haven´t even read it. Especially not the fine print.
4. We don´t care that much about short-term ROI (return on investment). We are patient, long-term investors and we are only interested in the long-term visions, ideas and goals of your company.
5. We are not investing so much because you are willing to sell at 50 percent of market price, we don´t care about money, we are investing because we believe in you as entrepreneurs and individuals.
6. We love to be passive investors, and we won´t interfere with your decision process that much. Really.
7. Our astounding experience, connections and market expertise is worth an extra 10 percent of stocks at the very least.
8. If you could only show me some major business (orders) coming your way, I would be interested to invest in your company.
9. We are looking for a swift and effective process. Time is important to us and we don´t believe in wasting it on a lengthy process.
10. This is the opportunity of a lifetime, and your chance at striking it rich. Everybody that has struck a deal with us has been amply rewarded in due time. Just sign those papers and we´ll work out the rest as we go along.