Putting your business ideas into actuality can be tough, most especially if you don’t know how to attract the people who can help take you there—the investors. In this episode, Tony Frischknecht shares four tips you can do whenever you are talking to a millionaire and get them to invest in your business. Join him as you learn how to go about your explanations, promises, proposals, finances, and more.
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What Millionaires Look For To Invest In Your Business
Four Tips On What You Need To Know When Talking To Investors
I’m going to bring you four tips when you are talking to a millionaire. Some of you are going to be out there looking for money or looking for investment in your cannabis company or some way to build and start. Like so many, even myself, I started with very little. I had to meet guys along the way and these people were able to help me get that leg up. Now that I have become a millionaire and if you haven’t heard my story, please check it out. If you go to TonyFrischknecht.com, you can check out my story there. I virtually started with small. I borrowed almost everything that I had. I had about $15,000 that I brought to the table that I put together slowly but I had to borrow another $30,000 or so. As we got bigger, we had some investments that needed more money. This is where I’m coming from and trying to share some of the information that I learned. This is what I look for when I’m talking to anybody about potentially investing in stuff that they’re working on.
This stuff is what you should be thinking about when you’re talking to somebody especially a millionaire, about investing in you or your company. Number one, be ready to have clarity on where you are going and the future of your company. What I mean by that is you don’t want a long-winded operation. You don’t want a long-winded explanation about what’s happening all around you all the time. You want to be quick and to the point. For instance, we’re going to be growing wholesale. We are going to sell to all the retail operations. That’s our plan. We’re growing so much weight per month.
We plan to be growing double that in six months and double that in a year so that they get the understanding that this is what you are. There are many mistakes where the business owner sounds confusing. We’re doing this and then we’re doing the grow but we’re also taking and then we’re growing clone so that we can sell those. It’s not very directed. If you grow then be growers. Talk about that. Don’t add a bunch of stuff because when you start hearing all these different things, this is what I think, these guys are not focused. They don’t know where they’re going. It’s a bad idea to go in this direction.
Number two, be conservative with your sales projections. I would say that 90% of the people you talk to in the industry have inflated expectations or goals. This is starting to change, don’t get me wrong. There are some companies that are changing this and their expectations are realistic. The example I would have is saying, “We’re going to take your $10. We’re going to turn it into $20 over the next two years.” This is a simple example. Not we’re going to take your $10 and turn it into $1 million over two years, that’s what I mean by inflation.
You want to set these expectations a bit lower so that when you break through them because you will if you’re working your tail off, you’re going to break through them. The old saying under promise, over deliver, that’s what you want to do for an investor. That’s how you’re going to make him happy because he’s going to set that expectation in his mind. You’re going to go through it and he’s going to be like, “You did it. This is awesome. Let’s do it again.” He’ll instill some confidence in you and your company and want to do more with you and that’s what you want. Whether or not you bring him along the next time, it’s entirely up to you.
The biggest mistake most people make is over promising. Don’t brag about your company. Paint a realistic picture for your investors. You can over promote yourself and let your work speak for itself. Many out there, they brag about themselves and when it comes down to execution and completing a project or a goal, they never get there. You lose confidence from your investors. You must be fully committed to your business, to your partnership, if you have one, to your pay, to your finances. Let me walk you through those, to your business. The business comes first before anything. When making any of your decisions, you always need to look back, “What’s best for the business?” I know this sounds simple. It’s like, “I’m not going to forget to do. I’m going to make sure that I am always thinking about the company,” but it becomes a challenge in hard decisions either pushing the business forward or putting yourself. As investors come on board, they will see this. These next steps I’m going to show you, we’ll break that out a little bit better for you.The biggest mistake most people make is over-promising. Click To Tweet
Partnerships. You must trust one another and be on the same page. What I mean by that is communication is huge here. On a weekly basis, you guys should be having at least one meeting with your partnerships along with management. Each of these teams should be having a discussion on the direction that the company’s going. You have to have what I call a True North, the same direction you’re heading all the time. Get everybody on the same page. These investors will come around. They will see this and they will go, “This is what the owner said. Now the partners are saying this and the management is saying this and you can see the employees saying this. It’s congruent all the way through the company that builds some trust in what you’re doing.” You’re not saying it. They’re seeing it.
Pay. If you’re receiving a paycheck as an owner, the timing must be right. Not only must be right for the company to withstand that but it also must be appropriate for that position. What I mean by that is you can’t be running customer service, running a register and paying yourself $60,000 a year. You may be the owner. However, that position requires much less. What I mean by that is you should be having somebody in place there that you’re paying $12, $15 an hour to run that register, not somebody that’s a $60,000 employee. You tend to run across, especially in newer companies, people that were in traditional market or gray market and have transitioned up into authority figure, a management figure or CEO figure and they’re paying themselves $150,000. Investors don’t like to see this. What they see is, “He’s just paying him a fat salary and there’s little money coming to the bottom line because they’re sucking it all out through paychecks, payroll,” whatever you want to call it. Be very aware of this.
I know this is a tough position for most people to be in because if they have started a retail outlet or grow, most of the time they don’t have any other income. Now I would suggest you at least have something along the side to pay your bills until you’re able to pay yourself through your company. I know my very first pay, we gave ourselves as owners a pay of $36,000 a year, which for a cannabis company, a lot of you out there are going to be like, “That doesn’t seem like very much.” There were a couple of partners, there were four of us so that had a lot to do with it. Also, we couldn’t drain the company dry. We kept reinvesting all the money that was coming back into the company to grow larger and faster.
Finances. Have your personal finances in order. If you haven’t read my book yet From Black Market to the Man, I talk about this. I am a true believer in personal finances and knowing where you’re at it is probably one of the biggest things that 95% of us out there don’t ever deal with and put to the side. This is where everything falls into place at the end of the day is your finances. If you don’t know where you’re at in your finances and people can tell by either the way you talk. The people around you, they can tell you’re not good with your own personal finances and you’re running this company that’s bringing in multi-millions of dollars a year. You could have a big issue because there’s going to be some trust that needs to be gained between you and the multimillion-dollar investor that’s coming on board. He sees that you’re probably going to treat company money like you do your personal money and that’s what you want to make sure you’re very clear about to an investor.
Number four, be confident in your business and where you’re headed but don’t be distracted by new opportunities. The shiny object syndrome happens to all entrepreneurs. This goes back to the True North that we were talking about earlier. If you have this in place, you can ask these questions like, “Is this right for the company?” “Is this new opportunity going to get us to where we want to go? Our True North, is it going to align with that?” One thing I’ll tell you is it takes courage to stay the course and stay in your lane, I remind myself of this every day when I’m doing any type of work or investing. Make sure you’re providing your best in the position you work in. Remember that being the CEO is one of the most challenging positions in the company. You may not be the best person for this position long-term. This falls back to what are your strong suits? What are you good at? Are you good at operations? Are you good with managing people? You need to stay close and understand your strengths and weaknesses.
You’ll hear from different people, especially multimillionaires. They may say, “You’re the face of the company. You need to be the CEO. You just need to understand that it may not be you.” There are opportunities for you to grow into the CEO position if you are heading that way but you need to play this on a case by case basis when you’re talking to these money guys or multimillionaires. Understand that a little bit of transparency is good but sometimes you can give a little bit too much information. These conversations should be had over several different contacts. What I mean by several different meetings you have so you can fill the other person out. You’re going to get an array of different people that are going to look at these a little bit differently. You don’t want to scare them away but you also want to let them know that you’re being honest and upfront with them so that they know they can trust you.Be confident in your business and where you're headed but don't be distracted by new opportunities. Click To Tweet
As you build your business, there is any time in the construction of the business you’re going to notice these types of people are going to come out. They’re either going to see you opening a store on the side of the road and they’re going to come up, “I want to get into this cannabis thing.” You have to remember that this is on everybody’s mind now, especially with all the new states that have passed on a recreational side or adult-use and medical. The last thing I’m going to tell you is there’s going to be a lot of people who want and waste your time. It’s very easy to get caught up in the excitement of, “Somebody has got some money and they’re going to help me build my business.”
You got to take a look at this I would say, pragmatically to understand that there are a ton of looky-loos that are looking into what you do. Most of it is comes because of the cash aspect and they understand how much money can be made. As a last note, please keep that in mind so you don’t spend days, weeks, months, even years with one person that has nothing. As you move forward, you’re going to create a relationship. Don’t burn your bridges, make sure you protect your time because it’s the most valuable thing you have. Thanks for joining. Once again, it’s been great being with you. I hope some of this information will be helpful to you. I know it was helpful for me even spending the time creating this episode for you made me think more into the way I invest. I hope some of that was transferred to you. Please push the subscribe button wherever you’re listening to. We appreciate that and also feel free to check out this and all our episodes at PlantProblem.com.